Dive Overview:
Indiana Secretary of State Diego Morales BlackRock was ordered to cease and desist. The company was charged Thursday with 54 securities violations for allegedly “misrepresenting” the company’s ESG commitments related to its investment strategies, according to an order obtained by ESG Dive.
The order alleges that BlackRock’s assertion that certain investment accounts do not follow “sustainable, impact or sustainable investing” strategies is “incongruous” with the company’s overall commitment to ESG through memberships such as the Net Zero Asset Managers Initiative. The level of involvement decreased Join Climate Action 100+.
Indiana’s Treasurer previously placed BlackRock on the state’s ESG watchlist, making it the second state to issue a cease and desist order to the company this year. The state of Mississippi issued a cease and desist order. An order was issued in March based on a similar complaint.
Dive Insights:
According to Governor Morales’ order, BlackRock manages “several funds” for the Indiana Public Pension System and “more than 415,000 Indiana residents.” The cease and desist order lists 54 alleged Indiana securities violations related to the company’s ESG integration statements, which the order alleges are inconsistent with disclosures BlackRock made about its non-ESG funds.
While BlackRock has said it does not employ ESG strategies in some of its funds, the asset manager has “issued multiple statements and actions committed to incorporating ESG considerations into all assets it manages,” Morales’ office said Thursday. That includes pursuing a net-zero target, the office said.
“My office is committed to rigorously enforcing the law and strengthening our regulatory framework to ensure Indiana investors are protected and those who abuse the system are held accountable,” Morales said in a statement.
In an emailed statement to ESG Dive on Monday, BlackRock called the order a “complete misunderstanding” of the company’s approach to investing and a “politically motivated attack.”
“We are focused on helping hundreds of thousands of Indiana clients achieve their investment goals,” the company said. “We intend to defend ourselves and our clients from this arbitrary use of state power.”
The order noted BlackRock’s status as a member of the UN-backed NZAM. The signatories promise To “[i]”We will implement a stewardship and engagement strategy with clear escalation and voting policies that are aligned with our goal of achieving net-zero emissions across all our managed assets by 2050 or sooner.”
The letter also touches on the company’s work with CA100+, which has seen a flurry of signatories this year. BlackRock transferred its membership to its smaller international division when JPMorgan and State Street withdrew from the climate coalition in February.
Goldman Sachs and Franklin Templeton and Sun Life Subsidiaries He is the latest person to leave the company in recent weeks. New survey of group members By the House Judiciary Committee.
“As the world’s largest asset manager, BlackRock has exercised significant voting power in implementing ESG standards, including its commitments to CA100+ and NZAM,” the order states. “Yet, BlackRock often downplays the extent of its actions.”
According to BlackRock’s latest investment management report, the company Only 4% of shareholder proposals are environmentally or socially related In the 2024 shareholder meeting season, the company supported 7% of shareholder proposals in 2023 and 21% of shareholder proposals in 2022, but support for shareholder proposals has decreased in 2024.
The order also cited the findings of a previous investigation by the Indiana Department of Finance, which noted BlackRock’s NZAM membership as evidence of the company’s ESG commitments.
