In addition to its membership in the groups, Skrmetti argues in his lawsuit that BlackRock's "extensive commitment to fulfilling ESG aims" is pursued through the firm's shareholder voting record and in its private engagement with companies.
"We allege that BlackRock's inconsistent statements about its investment strategies deprived customers of the ability to make an informed choice," Skrmetti said in a press statement. "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."
This lawsuit is the latest in a series of shots fired against BlackRock by red state politicians, who have attacked the firm and its CEO Larry Fink for their stance on ESG investing — an investing strategy that takes environmental, social and governance factors into account — and have collectively pulled billions of dollars from BlackRock's management in retribution for what they have described as an unfair attack on the U.S. energy industry.
A representative for BlackRock denied the validity of the lawsuit's claims in a statement.
"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.
Both Fink and his firm have stepped back from using ESG as a term this year, with Fink calling it "unfortunately politicized and weaponized" and saying that he was "ashamed" to be part of the ESG debate.
But Fink's rejection of the term ESG has done little to quell the criticism against him. In his lawsuit, Skrmetti acknowledges Fink's about-face on the term "ESG" but posits that his statements, combined with the firm's continued membership in the two climate groups, essentially means that BlackRock is trying to play both sides of the aisle by maintaining a "pattern of deception."
Tennessee's lawsuit seeks injunctive relief, civil penalties, disgorgement, restitution for customers and recoupment of the state's costs.
Notably, the two "activist groups" named in the lawsuit are large industry organizations whose membership includes asset management firms all over the world, including abrdn, Fidelity, Federated Hermes, Franklin Templeton, J.P. Morgan Asset Management and State Street — all of which are members of both industry groups.
BlackRock joined Climate Action 100+ in 2020, three years after the organization was founded by a collection of global pension funds including California Public Employees' Retirement System, Sacramento, the biggest pension fund in the U.S., and Japan's Government Pension Investment Fund, the world's largest pension fund. It is one of more than 700 investors — who represent a collective $68 trillion — who have signed on to Climate Action 100+'s climate goals, including meeting the Paris Agreement's goal of reaching net-zero emissions by 2050.
When BlackRock signed onto Climate Action 100+, it published a letter stating that it would continue to "independently exercise its fiduciary duties" to clients, which extended to "proxy voting and engagement with issuers on investment stewardship topics, including climate change."
The Net Zero Asset Managers initiative has similar goals and boasts 315 asset managers with a collective $57 trillion in AUM as signatories.
