Attorney General Skrmetti Announces Settlement With BlackRock, Inc. Regarding ESG Practices

  • Friday, January 17, 2025

Tennessee Attorney General Jonathan Skrmetti announced Friday a landmark settlement with BlackRock, Inc., resolving allegations that the global investment firm misled consumers regarding the role of Environmental, Social and Governance factors in its investment practices. The settlement concludes a lawsuit filed by the State of Tennessee under the Tennessee Consumer Protection Act.

Tennessee’s suit alleges that BlackRock failed to adequately disclose its integration of ESG considerations into its decision making with respect to asset management. The suit further alleges that BlackRock overstated the financial benefits of ESG-related strategies. These practices allegedly misled investors and consumers regarding BlackRock’s investment objectives and alignments with climate-focused initiatives and other policy-oriented goals.

“This resolution assures that the money Tennesseans invest with BlackRock is managed consistent with the funds’ disclosures,” said Attorney General Skrmetti. “While investors are always free to buy cause-oriented products instead of focusing on maximum return, this settlement ensures that only investors who make a knowing choice will see their assets directed toward these non-financial goals.”

Key Terms of the Settlement:

Enhanced Transparency: BlackRock will increase its disclosure of proxy voting practices, ensuring investors have greater insights into decision-making rationales.

Compliance and Oversight: BlackRock will implement compliance measures, including audits by a third-party service to monitor adherence to the agreement’s terms.

Investor Communications: BlackRock commits to ensuring that its communications with investors are consistent with well-established laws governing disclosure and fiduciary duty.

Commitment to Financial Interests: For funds that do not have investment objectives beyond financial performance, BlackRock commits to casting shareholder votes solely to further the financial interests of investors.

As part of the settlement, the State of Tennessee will dismiss the lawsuit without prejudice, reserving the right to refile if BlackRock does not substantially comply.

You can view the full settlement here.

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