Tennessee – Tennessee Attorney General Jonathan Skrmetti announced a landmark settlement with BlackRock, Inc., resolving allegations that the global investment firm misled consumers about the role of Environmental, Social, and Governance (ESG) factors in its investment practices. The settlement concludes a lawsuit filed under the Tennessee Consumer Protection Act (TCPA).
The state’s lawsuit claimed that BlackRock failed to adequately disclose its integration of ESG factors into its asset management decisions. The suit also alleged that BlackRock overstated the financial benefits of ESG-related strategies, misleading investors about the firm’s investment objectives and alignment with climate-focused and 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, providing greater insights into decision-making.
– **Compliance and oversight**: The firm will implement compliance measures, including third-party audits to monitor adherence to the settlement.
– **Investor communications**: BlackRock commits to ensuring its communications with investors align with established laws on disclosure and fiduciary duty.
– **Commitment to financial interests**: For funds without objectives beyond financial performance, BlackRock will vote shareholder shares solely to further investors’ financial interests.