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- State ex rel. Skrmetti v. Blackrock, Inc.
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State ex rel. Skrmetti v. Blackrock, Inc.
State ex rel. Skrmetti v. Blackrock, Inc. ↗
23CV-618Tenn. Cir. Ct.2 entries
Filing Date
Type
Action Taken
Document
Summary
01/17/2025
Settlement Agreement
Settlement agreement submitted to the court.
The Tennessee Attorney General agreed to dismiss his action against BlackRock, Inc. alleging violations of the Tennessee Consumer Protection Act related to BlackRock’s disclosures regarding environmental, social, and governance (ESG) factors in its management of investments. The dismissal is contingent on BlackRock’s substantial compliance with undertakings set forth in a settlement agreement. The undertakings included a requirement that BlackRock engage with portfolio companies and cast shareholder votes “solely to further the financial interests of investors” in “In-Scope Funds,” which are funds that do not disclose investment objectives beyond financial performance (such as sustainability) or screens or investment restrictions based on non-financial criteria. BlackRock also agreed to cast proxy votes based on its “own independent judgment and without coordinating or communicating its voting plans” with external entities and to maintain records regarding its reasons for declining to vote with management recommendations on environmental or social shareholder proposals. Other requirements included removing data regarding “sustainability characteristics” from the U.S. product pages for In-Scope Funds and disclosing on its website any memberships in organizations “principally devoted to achieving climate-focused investment or stewardship objectives and having written terms of membership.” A third-party service is to conduct annual audits of BlackRock’s compliance with recordkeeping obligations. BlackRock must establish procedures and training “reasonably designed to achieve compliance” with the settlement’s requirements.
12/18/2023
Complaint
Complaint filed.
The Tennessee Attorney General filed a civil enforcement complaint against BlackRock, Inc. in December 2023 alleging that the investment management firm had “been at the forefront of using aggressive strategies to push controversial Environmental, Social, and Governance [(ESG)] goals across the assets it manages,” including goals to reduce portfolio companies’ carbon emissions. The complaint alleged that BlackRock misled consumers about the scope of its ESG activity in violation of the Tennessee Consumer Protection Act. The Attorney General contended that the “shifting public and political dynamics around ESG have left BlackRock in a bind”— needing to appeal to “a broad base of customers, many of whom do not want their funds or investment managers engaged in ESG-related activities,” while remaining a member of organizations that “demand sweeping ESG commitments.” The Attorney General charged that BlackRock had elected to deceive consumers about its commitment to ESG aims by “falsely convey[ing] that certain of its funds do not incorporate ESG considerations” and by “overstat[ing] the extent to which its ESG aims bear on companies’ financial positioning and performance,” including by representing that consideration of ESG factors creates financial benefits to investors. The Attorney General sought an injunction to bar BlackRock from engaging in TCPA violations; civil penalties; orders and judgment restoring to consumers money or property lost as a result of the violations; and orders and judgments necessary to “disgorge the net-profits and ill-gotten gains BlackRock realized.”