The US state of Tennessee is suing BlackRock for the alleged breaching of consumer protection laws by failing to fully disclose its ESG aims.

The suit states that BlackRock’s membership of Climate Action 100+ and the Net Zero Asset Managers initiative is “misleading” investors who may believe that Blackrock is only pursuing ESG investing in funds labelled as such. The suit also alleges that Blackrock has been inconsistent in stating whether it focused exclusively on investment returns or whether it gave preference to ESG considerations.

Tennessee’s attorney general, Jonathan Skrmetti, commented, “we allege that BlackRock’s inconsistent statements about its investment strategies deprived customers of the ability to make an informed choice. Some public statements show a company that focuses exclusively on a return on investment, others show a company that gives special consideration to environmental factors.” The lawsuit claims that “BlackRock has downplayed the extent to which ESG considerations drive its investment strategies across all holdings, even in non-ESG funds” and “overstated the extent to which ESG considerations can affect companies’ financial performance and outlook”.

Blackrock has responded by saying, “we reject the Attorney General’s claims and will vigorously contest any accusations that BlackRock violated Tennessee’s consumer protection laws. Contrary to the Attorney General’s claims, BlackRock fully and accurately discloses our investment practices and our approach to proxy voting,” the representative said.

The state of Tennessee’s is seeking injunctive relief, civil penalties, disgorgement, restitution for customers and recoupment of the its costs.

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