Tennessee Sues BlackRock Over ESG Policy Deception
On Monday, the State of Tennessee filed a groundbreaking lawsuit in state court against asset management giant BlackRock Inc., alleging the company illegally deceives consumers in the Volunteer State through its environmental, social, and governance (ESG) investment strategies. The important new case brings into question the balance between environmental commitments and protecting customers’ best interests.
BlackRock manages an unimaginably large $9.1 trillion in assets.
The key to Tennessee’s allegations in the complaint filed in the Circuit Court of Williamson County, Tennessee, is the claim that BlackRock has been playing a double game with investors. Tennessee Attorney General Jonathan Skrmetti said in a media statement: “BlackRock has articulated two inconsistent positions: one focusing solely on money and the other focusing on environmental impact.”
The lawsuit claims BlackRock is guilty of misleading practices that violate Tennessee’s consumer protection laws. Generally speaking, placing climate activism over protecting client returns is claimed to be a breach of basic fiduciary duty and is misleading and deceptive under state law.
The case could enter the spotlight as a forum for the nationwide controversy about how ESG standards may improperly sway corporate decisions away from protecting shareholders to curry favor with globalist organizations and leftist politicians.
Skrmetti added, “These big asset managers have unbelievable amounts of leverage over the economy.” Because of the mammoth effect its investment decisions have on companies, BlackRock allegedly misuses that power to pressure corporate boards into decisions they would not make if they were only interested in protecting shareholders.
Although BlackRock has not yet filed a formal response to the lawsuit in court, it has firmly denied it is guilty of any wrongdoing. It said it does not conceal its investment practices or how it influences corporate proxy voting. A company spokesman said, “We reject the Attorney General’s claims and will vigorously contest any accusations that BlackRock violated Tennessee’s consumer protection laws,” a BlackRock spokesperson asserted.
The outcome of the litigation could have far-reaching consequences for investors and consumers nationwide, possibly redefining how companies weigh environmental commitments against responsibilities to customers.
