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Tennessee, BlackRock Reach Nine-Page ESG Settlement With Transparency Measures

Jan 17, 2025, 07:18 PM

The state of Tennessee has reached a settlement with BlackRock Inc., resolving allegations that the asset management firm misled consumers about the role of Environmental, Social, and Governance (ESG) factors in its investment practices. The lawsuit, filed under the Tennessee Consumer Protection Act, accused BlackRock of overstating the financial benefits of ESG-related strategies and failing to adequately disclose its integration of ESG considerations. Under the terms of the nine-page settlement, BlackRock has agreed to enhance transparency in its investment practices, including disclosing which funds are explicitly focused on ESG, removing ESG ratings from certain funds, and providing detailed proxy voting disclosures. The firm will also disclose its climate-focused memberships and undergo third-party audits over the next three years to ensure compliance with the agreement. Tennessee Attorney General Jonathan Skrmetti stated that the settlement ensures Tennesseans' investments will align with their financial goals, preventing funds from being directed toward non-financial objectives without investors' explicit consent. BlackRock has denied any wrongdoing but has committed to increased transparency and compliance measures. The settlement is seen as a precedent-setting move in the broader debate over ESG investing.