CONTRIBUTOR
Republican Tennessee Attorney General Jonathan Skrmetti filed a consumer protection lawsuit Monday against BlackRock, the world’s largest asset manager and a leading proponent of Environmental, Social and Corporate Governance (ESG) investing.
The consumer protection suit alleges that BlackRock has misled Tennessean consumers about the scale and impacts of its ESG initiatives for several years. The suit further alleges that BlackRock’s own policies and corporate voting records demonstrate that its ESG push bleeds into financial products that are marketed as non-ESG funds, despite the company’s statements that it allocates capital where its clients request as a fiduciary.
“We allege that BlackRock’s inconsistent statements about its investment strategies deprived consumers of the ability to make an informed choice,” Skrmetti said in a statement. “Some public statements show a company that focuses exclusively on return on investment, others show a company that gives special consideration to environmental factors. Ultimately, I want to make certain that corporations, no matter their size, treat Tennessee consumers fairly and honestly.” (RELATED: Jim Jordan Hits Major Financial Institutions With Subpoenas)
Nikki Haley Meets With BlackRock CEO Larry Fink, Other Wall Street Eliteshttps://t.co/2CHInqgu4g
— Daily Caller (@DailyCaller) November 17, 2023
BlackRock has more than $8 trillion in assets under management, according to the lawsuit. Because of its size and diverse holdings, the company has considerable influence over many American firms because of its large shareholder voting blocs, which Skrmetti alleges the company uses to push its own policies and preferences, including ESG policies that advance the decarbonization and climate agendas.
“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,” a BlackRock spokesperson told the Daily Caller News Foundation. “On behalf of our clients, BlackRock has invested approximately $40 billion in Tennessee, and we are helping more than 600,000 hard working Tennesseans retire with dignity. We are proud of our contribution and committed to the future in Tennessee.”
Many of BlackRock’s clients are institutional investors, including pension funds, endowments and foundations, official institutions, and financial institutions, according to the lawsuit.
“BlackRock has agreed to use all of the assets in their portfolio to push the net-zero agenda,” Will Hild, the executive director of Consumers’ Research, told the DCNF. “If you have a dollar invested in BlackRock, you’re invested in an ESG fund.”
Conservative officials have sharply criticized ESG investing in the past for injecting politicized considerations into the traditional model of investing, in which maximizing returns is the top priority.
BlackRock’s ESG investing has drawn the scrutiny of Republican state officials in the past as well. Several red states, such as Louisiana and Missouri, have divested tens of millions of dollars of state assets from the firm and some of its competitors that similarly promote ESG investment. More recently, BlackRock and several of its prominent competitors have been involved in a House Judiciary Committee investigation into potential collusive agreements to push ESG.
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This lawsuit has a good chance of winning. When I went to law school, both corporate and SEC law was quite clear: Management and Board had only a fiduciary duty to maximize shareholder returns. Since then, the idea got broadened to include a duty to shareholders, customers, and employees. The legal reasoning was without customers and employees it was impossible to maximize shareholder returns.
ESG is none of the above. Blackrock is a shareholder trying to get corporate management and boards to do stuff it wants outside this well established legal framework.
Blackrock’s defense that it applies whatever standard the people for which it is a fiduciary wants (Kentucky) fails on Blackrock’s own public statements about ESG.
I wonder it this is a change of the Blackrock portfolio, or if some assets in the portfolio went ESG.
The Kentucky problem is that Blackrock is shifting its portfolio toward ESG. And Kentucky earns the thereby lowered portfolio return. Blackrock doesn’t have many different portfolio funds depending on fiduciary wishes. If they were to create that structure, they would lose market scale, which is key to their success. Real big means real low trading commissions and real big financial information favors.
I have no idea how much things might vary from state to state but this article is about Tennessee and you keep referring to Kentucky. Is there a reason to this rhyme?
He probably thinks Jack Daniels is Bourbon too.
Does a shareholder have the option to vote their shares themselves in the case of pooled retirement funds? BlackRock shouldn’t be able to push an ideological agenda to order companies to report and skew actions this way or that to suit it’s agenda outside of fiduciary matters.
No. When a shareholder (Kentucky) pools their funds into an intermediate fiduciary for cost savings results, they live with the fiduciary results. Almost all of most people’s state or corporate retirements fit this.
I have managed my own money for decades. Takes a lot of work. But if Buffet was doing 16, I as a lot less wise smaller investor was doing 12—over more than 30 years. HBS finally paid off.
I can’t say about all companies such as BlackRock, but many pass the money to other firms to invest. For example, the Vanguard Group uses the Wellington Management Company, and others. So, if a person invests through via her/his company, university, or state pension plans they will likely be three or four degrees of separation from their money.
As Rud says @4:58, investing on your own directly “takes a lot of work.”
If you own stocks directly, you will be contacted to vote on certain things including directors of the company. To be an involved owner you will have to learn about each person — or just vote the slate recommended by the company. Do you own stocks in 50 or 100 companies (are you diversified?) and learn and vote in each case?
IIRC, the premise of a corporation was that it would operate in the public interest, convenience or necessity in order to limit the liability to the shareholders. This would imply that the management and board’s first responsibility is to obey the law, with the duty to maximize the shareholder returns while operating in the constraints of the law. AFAIK, the law is neutral about ESG, so management trying to promote ESG is fair game for legal action.
Blackrock manages the federal employee Thrift Savings Plan assets, outside of government bond funds. I transferred my 10 years’ worth of TSP savings into government bonds a while ago, and was glad I did. The various equity funds in the TSP lost something like 10% of their value in the first quarter after Biden’s rule began. And that was when other equity funds were still making money, Though I’m still losing money (2% gain versus 7+% inflation loss), I’m still not losing it as fast as people who let Blackrock handle their funds are.
Hmm: rather depends on who ends up judging the case.
I have no respect for Black Rock and moved my money out of it.
A side note, not an attempt to “derail”.
I remember and election where the 3 US networks (before cable and when color TV was relatively new) used colors on a map to show wins and losses. One network used green and yellow. One used different contrasting colors.
But one did use red and blue. The Dems wins were red and the Reps wins were blue.
They’ve all now settled on red for Reps and blue for Dems.
I suppose that Dems objected to being “red” so as not to be associated with “Red China”, a common term at the time.
Or communist Russia
“Red” was associated with communism. (Look at the flags for the USSR.)
But at the time “Red” China was in common usage to differentiate the communist government of China from the previous government of China that fled to Taiwan.
Setting of the colors was between 1972 (CBS) and 1996.
Thanks.
I remember the different American networks using different colors to show a map of results.
I don’t remember when they all started to label Republicans as “Red” and Democrats as “Blue”.
The reverse would be more accurate.
Blackrock is either actually using shareholder funds for a political purpose, with disregard for monetary return, or it is falsely claiming to do so.
I would argue the board is in violation either way.
Larry Fink is a fink….using OPM other people’s money to accomplish his political goals. The demrat party has become a criminal operation led by the head criminal…Joke Robinette Biden Jr.
What motivates BlackRock to push ESG? Do they really believe in it- or do they see profits from pushing it? Looks like they have the $$$ to hire a thousand liars… er… I mean lawyers.
JZ, being green (ESG, DEI) gets social street cred in NYC. And Blackstone is about as NYC street cred as it gets.
I think it’s more of a political move and they were hoping to get preferential treatment as an adopter of ESG from the Biden regime. The slight rowback in announcements that may or may not represent a shift in some areas away from ESG comes only after a series of regulations from red states, prohibiting Blackrock and other ESG investment companies from investing in state registered companies.
Almost every US Oligarch supports the Democrat crony capitalist party.
They are so overly rich, whatever it costs them amounts to no financial damage to their lifestyle.
They get personal rewards for doing that.
They do not care about the others harmed by their malfeasance. Since the deep state SEC will not attack them like they have Musk since he bought and fixed Twitter/X, they do not care that what they do is illegal. They just need to make sure a Republican NEVER AGAIN becomes POTUS so they will never face the power of the federal DOJ, SEC, etc.
Don’t forget that the heads of some groups are willing to lose $$ in exchange for power in the name of “The Cause”.
Am I reading a variation on Greenwashing…
i.e. They are claiming that all their products are ESG compliant but if they were doing their fiduciary job properly, there is no way that that can be true.
Maybe in the la-la-land of climate science & Demrat policies where anything can and often does happen, but not anywhere else.
Therein lies a problem, is it A Crime to live in la-la-land and how would anyone prove it?
For CliSci it appears to be a virtue, a gold-mine and a route to absolute power
The problem here is we think logically. We assume that a business executive also would be exceptionally smart, not prone to hopping on to every popular trend ; and make cold hard calculated non emotional decisions. And we expect a smart executive to at least be sure his government graft ( fill in the blank) industrial complex subsidy plan is viable.
Non of that applies anymore – we are in the age of mass movement insanity.
Or politically motivated rather than financially motivated.
BlackRock has defrauded a lot of states’ pension funds by knowingly and admittedly following an investment strategy that doesn’t prioritize the best returns. Throw the book at them and force them to make up the shortfall they caused with their own ill-gotten gains. Also, explore if Larry Fink is personally liable for the fraud he’s been leading.
If this is successful then it should lead to some other AG’s filing against Blackrock/Fink. It’s too much to hope for that Democrat AG’s will follow suit but some of the Republican ones might.
At last count 17 state attorneys general are investigating or filing suit against Blackrock.
It’s a great thing to see Democrat states starting to deal with the neomarxist takedown of individual freedoms and free enterprise.
It seems clear that the whole anthropo global warming front for globalist governance is well into the first stages of collapse. The consensus no longer believes there is a climate crisis evidenced by their desperate behavior of moving goalposts, fiddling temperature data, fiddling color photos to make coral look to be dying off(!), ‘hiding declines’, using proxies upside down…
to attempt to resuscitate bruitally falsified “CO2 temperature control knob theory. For what other reason would such a campaign be launched?
Desperately pressing to instigate coercive policy, seeking to undertake risky geoengineering to dim the sun and newly embracing nuclear energy, underscores deep fears that it’s now equally likely for it to be colder by 2100 with businesses usual! They want to scramble to the front of the parade to take credit for having having saved planet that they worry may not need saving.
And their is an even more gut wrenching fear for them below this one. Having supported the grievous harm to the global economy, agriculture, industry, and vital life-giving energy, and wasted trillions that has pushed untold millions below the margin. How many millions of Climate-Policy casualties from crimes against humanity were perpetrated in Sri Lanka alone, a failed state that was prosperous only one year before this? Their is a frightful silence from that country Nobody is counting.
Perps like the evil WEF billionaire ‘elites’ will get off Scot-free They can point fingers at Jim Hansen, Michael Mann, Stefan Rahmstorf, Richard Betts,
Myles Robert Allen,
Gavin A Schmidt, …and the rest of the rogues gallery of disaster enablers.,
Except that Tennessee and it’s AG appear to be Republican, not Democrat. I don’t think a Democrat state would have done this.
They want to make it a jailable offense for using gasoline powered lawn equipment in Washington State.
If I lived in WA, I’d find out which pols / activists are supporting this idiocy – I’m sure it wouldn’t take a lot of effort to obtain video evidence when the lawn services show up at their homes next spring.
“There are some hard decisions and trade-offs we, as a society and as individuals, need to make together for a successful transition to a net zero economy.”
In many cases it will fall to politicians to make these trade-offs on our behalf and there will be a range of people and industries significantly affected.
You can’t make a net-zero Australia on a gas cooktop (msn.com)
Nup you climate changers kept promising us we’d all have lots of green jobs and cheaper energy from Gaia so you aint weaselling out of that now scumbags.
What is the purpose of the word “Misleading” in the title of this piece? I assumed it meant that the AG and his lawsuit were misleading, but they appear to be fairly straightforward and to the point. Blackrock’s public statements have definitely been misleading, but the title is about the AG’s lawsuit. So what is misleading about it?
The AG is basing his case on what Blackrock has said and its press releases. The case is about whether Blackrock was misleading investors into believing that they were putting the returns or financial considerations ahead of all other concerns whilst using ESG investing which puts virtue-signalling ahead of all financial considerations.
AGW is just one component used to push ESG/WEF Marxist/One World Government ideology. Everything they do aligns with the UN’s Agenda 21. All brought to you by unelected bureaucrats and corporations propped up by compliant MSM.
NOTICE. Who runs blackrock (and with it corporations). Media. Higher ed. Gov’t bureaucracy. Big tech. notice folks. Cultural war combined with immense grifts for themselves and others willing to sell out. It is not about climate, or science, or 98% of the people. Fink is on one end, epstein on the other.