BlackRock and the state of Tennessee reached a settlement Friday over a lawsuit that alleges the asset management company downplayed how big a role environmental, social and governance proposals play in the investment process.
The settlement is a new move for the red state, which has launched attacks on companies that have ESG goals, including DEI initiatives (a subsection that stands for diversity, equity, and inclusion), saying the proposals go against shareholder interests. It will be a victory.
“BlackRock's strict obligations under this settlement ensure that Tennesseans have no obligation to ensure that their retirement funds are used to support radical ideologies they oppose,” Tennessee Attorney General Jonathan Scumetti said in a statement. will disappear,” he said.
Under the settlement, BlackRock is subject to increased transparency, regular audits, compliance training, cooperation with the Attorney General, improved communication with investors, and commitment to financial interests.
The lawsuit, filed in 2023 by the state of Tennessee, accused BlackRock of making “misleading” statements about how strongly its ESG proposals guided its investments.
BlackRock rejected the claims, saying it accurately disclosed its investment practices.
A BlackRock spokesperson told the Post in a statement that the company is “pleased to resolve this matter.” “BlackRock has consistently acted in the best interests of our clients and welcomes the opportunity to demonstrate that fact by providing greater transparency into our operations.”
The settlement did not result in fines, fines, or admissions of wrongdoing on BlackRock's part.
Last week, a federal judge Ruling that American Airlines violated federal law By enabling 401(k) management company BlackRock to consider ESG factors in its investments.
Judge Reed O'Connor of the Northern District of Texas said the airline had breached its duty of loyalty.
Friday's settlement could serve as a marker for other lawsuits in the Republican-led war on ESG investing.
A coalition of 11 states led by Texas filed a lawsuit in November accusing BlackRock, Vanguard Group and State Street Corporation of operating as an “investment cartel.”
The lawsuit accused the asset managers of colluding to buy stakes in coal producing companies to push ESG goals, hurting coal production, raising electricity prices and boosting the company's profits. .
BlackRock dismissed the lawsuit as “baseless” claims that defy “common sense.”
The company previously said, “The allegation that BlackRock invested funds in companies with the intent to harm them is baseless and contrary to common sense.”
