BlackRock is back in Anti-ESG’s crosshairs. The Indiana Secretary of State issued a cease and desist letter last week to the firm alleging securities fraud. The Indiana letter is similar to one sent by the Mississippi Secretary of State back in March and alleges that BlackRock has misled investors about the benefits of considering ESG factors in investment decisions. The Indiana Capital Chronicle summarizes the allegations stating:
“The Indiana Securities Division alleges BlackRock, ‘through its assertions relating to ESG products and offerings, has repeatedly made false and misleading statements to Hoosier investors,’ Morales said. The company is accused by Morales of telling clients their financial prospects and outcomes would be better in the long run through ESG-backed funds. The secretary of state emphasized in his letter that there is ‘little to no evidence’ to back that up, although Morales offers no evidence of his own to substantiate the allegations.”
BlackRock argues that the letter is politically motivated and misrepresents the firm’s approach to ESG. BlackRock isn’t the ESG champion that Mississippi and Indiana make it out to be and BlackRock’s support for ESG proposals in the 2024 proxy season remained low. It’s unclear whether the Mississippi and Indiana letters will eventually evolve into full-blown litigation. If the states do bring lawsuits they join a growing body of cases asking courts to evaluate the role of ESG in investing. So far these cases have seen mixed results, with some being thrown out while others are ongoing. So far, no courts have found ESG investing to be unlawful, but that hasn’t stopped – and isn’t likely to stop – more cases from being brought.
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