On
In a statement, Attorney General Skrmetti said "[s]ome public statements show a company that focuses exclusively on return on investment, others show a company that gives special consideration to environmental factors. Ultimately, I want to make certain that corporations, no matter their size, treat
The lawsuit is the next, and most aggressive to date, step in the ongoing partisan debate among public enforcement officials, namely state attorneys general, regarding the corporate focus on ESG-related issues. The complaint addresses BlackRock's allegedly conflicting positions regarding the influence of ESG-related considerations over BlackRock's business decisions across its assets. Attorney General Skrmetti asserts that BlackRock downplays the extent to which such ESG-related considerations drive investment strategies. BlackRock manages over
The complaint discusses BlackRock's focus on ESG-related commitments. For example, the use of corporate engagement and the voting of its shares to achieve various climate-related policy goals. BlackRock's corporate engagement has included joining ESG-related coalitions such as the Net Zero Asset Managers Initiative and Climate Action 100+. Membership in these coalitions requires companies to agree to climate change related goals, such as achieving specific emissions reduction targets. These agreed-upon goals include lobbying, shareholder proposals, and corporate strategies aimed at achieving net zero carbon emissions by 2050. But, the complaint alleges that BlackRock has both "falsely conveyed that certain of its funds do not incorporate ESG considerations" and "overstated the extent to which its ESG aims bear on companies' financial positioning and performance."
Earlier this year, on
Given the ESG-related backlash, in June,
The complaint alleges that BlackRock's ESG-related consumer deception violates the Tennessee Consumer Protection Act (Tenn. Code Ann. § 47-18-104(a), (b)(27)).2 Attorney General Skrmetti alleges that "BlackRock has engaged in a series of unlawful ESG-related misrepresentations and omissions in connection with the marketing or sale of its investment products and services to
Although the prior statements by conservative attorneys general certainly threatened legal action, this is an unprecedented claim brought against a company for its ESG-related efforts. But, we should note that the lawsuit does not broadly condemn ESG efforts. The lawsuit is based on the allegation that there is mixed-messaging to consumers, which may lead to consumer confusion. BlackRock's corporate identity as an asset manager, as opposed to another type of corporation, also was a focus of the complaint. Lastly, and as stated above, only Attorney General Skrmetti brought the lawsuit, while 21 attorneys general signed the
Footnotes
1. The twenty-one state signatories included
2. "(a) Unfair or deceptive acts or practices affecting the conduct of any trade or commerce constitute unlawful acts or practices and are Class B misdemeanors. . . . (b)(27) Engaging in any other act or practice which is deceptive to the consumer or to any other person; provided, however, that enforcement of this subdivision (b)(27) is vested exclusively in the office of the attorney general and reporter[.]" Tenn. Code Ann. § 47-18-104 (West)
Originally Published
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