Mississippi Says BlackRock Deceives Investors on ESG Agenda, Orders It to ‘Cease and Desist’

A sign for BlackRock Inc. on its building in New York, on July 16, 2018. Reuters/Lucas Jackson

Red state officials put more heat on BlackRock this week, with Mississippi charging that the world’s largest asset manager had misled investors about its support for the progressive environmental social governance movement, also known as ESG, in violation of state securities laws.

“Investment companies will not push their political agenda on Mississippians, especially through fraudulent and deceptive means,” Michael Watson, Mississippi’s secretary of state, said in an issued statement. “All citizens should have the opportunity to make informed and educated decisions when investing their hard-earned money.”

In a March 26 administrative order, Mississippi alleged that BlackRock has made untrue statements to investors regarding the firm’s “involvement in pushing Environmental, Social, and Governance (‘ESG’) factors on portfolio companies.”

“Many of BlackRock’s acts, practices, and courses of business operate or would operate as a fraud or deceit upon investors,” the state order claimed. It also charges that BlackRock has used its power as one of the world’s largest shareholders to pressure companies to conform to progressive causes, such as the Paris Agreement on global warming.

Mr. Watson stated in his letter to BlackRock that the firm has voted third-party investors’ shares in support of shareholder proposals forcing target companies to set carbon dioxide emissions reduction targets and align their businesses with 2050 net zero emissions goals. He cited a company statement that BlackRock takes “voting action against management” of companies that are “making insufficient progress integrating climate risk into their business models or disclosures.”

“BlackRock’s statements to the contrary are false or deceptive,” he stated.

Mississippi ordered BlackRock to “cease and desist from making fraudulent statements, omissions, and other misrepresentations that operate or would operate as a fraud upon investors.” It also orders BlackRock to stop offering funds in Mississippi that the state says are marketed with claims that are “materially misleading or otherwise likely to deceive the public.”

Other States Against BlackRock

This action comes on the heels of a decision on March 19 by Texas’ Board of Education to fire BlackRock as the manager of its $8.5 billion Permanent Education Fund. That move was also in response to what state officials say is BlackRock’s longstanding support for ESG goals, to the detriment of local oil and gas companies.

Aaron Kinsey, Texas Board of Education chairman, told The Epoch Times that “there are [other] people we can do business with, and my view on that is we should be doing business with those whose values are aligned with ours and definitely not with those who are contradictory to our long-term interest.”

BlackRock criticized the Texas Board of Education’s action as “unilateral and arbitrary,” stating that it “ignores our $120 billion investment in Texas public energy companies and defies expert advice.”

In contrast to states such as Texas that have boycotted BlackRock, Mississippi is threatening legal action against the firm. In this regard, Mississippi’s actions are similar to a lawsuit brought by Tennessee Attorney General Jonathan Skrmetti in December 2023, which charged that BlackRock violated state consumer protection laws by misleading investors and that it has used its shareholder power to push a political agenda on companies.

In response to the Tennessee lawsuit, BlackRock told The Epoch Times, “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,” Christopher Van Es, BlackRock’s communications director, stated. “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.”

Other conservative states have also criticized BlackRock for its alleged support of ESG.

In 2022, 19 state attorneys general wrote a letter to BlackRock, charging that it “used citizens’ assets to pressure companies to comply with international agreements such as the Paris Agreement that force the phase-out of fossil fuels.” The letter highlighted BlackRock’s membership in net-zero organizations such as the Net Zero Asset Managers initiative (NZAMi), Ceres, and Climate Action 100+, whose members pledge to reduce the use of oil, gas, and coal.

In February, BlackRock dropped out of Climate Action 100+ but remains a member of other net-zero clubs. Other Wall Street titans JPMorgan Chase and State Street joined BlackRock in quitting this club. Vanguard, another “big three” asset manager, quit NZAMi in December 2022.

The Epoch Times reached out to BlackRock for comment regarding the Mississippi cease-and-desist order, but did not receive a response as of press time.