Tennessee Files Lawsuit Against BlackRock Alleging Deceptive Practices in ESG Investments

On Monday, Tennessee initiated legal action against BlackRock, claiming that the prominent asset management firm violated the state’s consumer protection law in its advocacy of ESG (Environmental, Social, and Governance) investing.

Attorney General Jonathan Skrmetti, a Republican, accused BlackRock of providing contradictory statements by emphasizing both maximizing investment returns and giving “special consideration to environmental factors.”

This groundbreaking legal action questions the firm’s adoption of the contentious ESG investment strategy, commonly linked to emphasizing climate change and social justice politics—referred to as “woke capitalism” in conservative circles.

BlackRock countered Skrmetti’s claims, affirming its commitment to staunchly defend against any accusations of violating Tennessee’s consumer protection laws.

“Contrary to the attorney general’s assertions, BlackRock consistently and accurately discloses our investment methods and our stance on proxy voting,” stated a spokesperson from BlackRock.

They stated that the company directed approximately $40 billion into Tennessee on behalf of its clients.

BlackRock has consistently refuted allegations of boycotting oil and natural gas companies, citing its support for ESG and corporate net-zero emissions goals. The firm denies placing political agendas above fiduciary responsibilities.

This legal action intensifies the ongoing clash against ESG strategies, particularly from red states, targeting significant investment entities like BlackRock, Vanguard, State Street, Wells Fargo, and JPMorgan Chase.

Tennessee’s 64-page lawsuit, filed in Williamson County near Nashville, calls for a grand jury trial. It seeks reimbursement from BlackRock for legal expenses, civil penalties, and consumer restitution, requesting $1,000 per violation of the state’s consumer protection law.

The legal complaint contends that BlackRock’s ESG investments violate their fiduciary duties to clients and are deemed “deceptive acts and practices under the Tennessee Consumer Protection Act.”

This legal move underscores Tennessee’s position among states with Republican-led legislatures that have passed laws prohibiting ESG investments involving state funds or partnerships with pro-ESG asset managers and banks.

This resistance to ESG has led to states divesting billions from BlackRock, a firm that reported assets under management of around $9.5 trillion earlier this year.