Tennessee Settles ESG Dispute with BlackRock
Friday, Jan 17, 2025 12:58 pm ET
1min read The Tennessee Attorney General's office has reached a settlement with BlackRock, Inc., resolving allegations that the global investment firm misled consumers regarding the role of Environmental, Social, and Governance (ESG) factors in its investment practices. The settlement, announced on January 18, 2025, concludes a lawsuit filed by the State of Tennessee under the Tennessee Consumer Protection Act (TCPA).
Tennessee's suit alleged that BlackRock failed to adequately disclose its integration of ESG considerations into its decision-making process with respect to asset management. The lawsuit further claimed that BlackRock overstated the financial benefits of ESG-related strategies, which misled investors and consumers regarding the investment objectives and alignments with climate-focused initiatives and other policy-oriented goals.
As part of the settlement, BlackRock has agreed to enhance its transparency, implement compliance measures, and ensure that its communications with investors are consistent with well-established laws governing disclosure and fiduciary duty. Additionally, BlackRock has committed to casting shareholder votes solely to further the financial interests of investors for funds that do not have investment objectives beyond financial performance.
The settlement is a significant step towards ensuring that investors are provided with accurate and transparent information regarding the role of ESG factors in BlackRock's investment practices. This resolution assures that the money Tennesseans invest with BlackRock is managed consistent with the funds' disclosures, aligning with the interests of investors who seek to align their investments with their values.
The settlement also sends a strong message to other asset managers and ESG investors, emphasizing the importance of transparency and accurate disclosure of ESG integration practices. As the demand for sustainable investing continues to grow, investors are increasingly seeking funds that explicitly focus on ESG factors and have clear, transparent disclosure practices. This settlement may encourage other asset managers to improve their transparency and align their practices with their disclosures, ultimately benefiting investors who seek to align their investments with their values.
In conclusion, the settlement between Tennessee and BlackRock is a positive step towards enhancing transparency and accountability in the ESG investing landscape. By ensuring that investors are provided with accurate and transparent information regarding the role of ESG factors in investment practices, this settlement helps to promote a more informed and responsible investment environment. As the demand for sustainable investing continues to grow, investors can expect to see more focus on transparency and accountability from asset managers and ESG funds.
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