(Reuters) -The U.S. state of Tennessee has sued BlackRock alleging the world’s largest asset manager breached consumer protection laws by making “misleading” statements about its environmental, social and corporate governance (ESG) investment strategies.
According to a court filing, the state of Tennessee has alleged BlackRock downplayed the extent to which ESG considerations drive the firm’s investment strategies and their affect on companies’ financial performance and outlook.
BlackRock said they rejected Tennessee Attorney General Jonathan Skrmetti’s claims. “BlackRock fully and accurately discloses our investment practices and our approach to proxy voting,” the asset manager said in an emailed statement to Reuters.
Earlier this year, Skrmetti had demanded ten major asset managers provide information over how they seek to tackle climate change, as part of an investigation into potential breaches of consumer law.
Skrmetti and 20 other Republican state attorneys general also wrote to asset managers in March suggesting they are breaching their fiduciary duties in their handling of environmental or social issues.
Companies and investors increasingly consider factors such as climate change and workforce diversity, which they say can affect company performances and reputations. The approach has received backing from Democratic leaders, including U.S. President Joe Biden, who used his first veto of his presidency to defend a rule on ESG investing.
Meanwhile, Republicans, many from energy-producing states, have joined a growing chorus challenging ESG.
(Reporting by Manya Saini, Jaiveer Shekhawat in Bengaluru, Nate Raymond and Ross Kerber in Boston; Editing by Krishna Chandra Eluri)