ESG strategy ‘misleading’: Tennessee sues BlackRock

The state of Tennessee has filed a lawsuit against BlackRock, the world’s largest asset manager, accusing it of violating consumer protection laws by making “misleading” statements about its environmental, social, and corporate governance (ESG) investment strategies. Tennessee alleges that BlackRock downplayed the impact of ESG considerations on its investment strategies and their effect on companies’ financial performance.

BlackRock has rejected the claims made by Tennessee Attorney General Jonathan Skrmetti, stating that the company fully and accurately discloses its investment practices and proxy voting approach. Earlier this year, Skrmetti had requested information from ten major asset managers regarding their efforts to address climate change as part of an investigation into potential consumer law violations.

Skrmetti and other Republican state attorneys general had also written to asset managers in March, suggesting that they may be breaching fiduciary duties in handling environmental and social issues. The dispute reflects a broader discussion in which companies and investors are increasingly considering factors like climate change and workforce diversity that can impact company performance and reputation. While Democrats, including President Joe Biden, support this approach, Republicans, particularly from energy-producing states, are raising concerns about ESG considerations.