Tennessee’s attorney general has agreed to drop a landmark lawsuit against asset manager BlackRock (BLK), after the company agreed to make concessions over how it uses environmental, social and governance (ESG) factors in investing decisions.
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Settling the case, BLK agreed to improve transparency and disclosures relating to how it applies ESG to its investments, indicating it is further watering down its commitment to sustainable investing strategies.
Tennessee attorney general Jonathan Skrmetti had alleged that BlackRock failed to adequately disclose its integration of ESG considerations into its decision making with respect to asset management, potentially harming investors.
The suit also claimed BLK overstated the financial benefits of ESG-related strategies, misleading investors and consumers regarding the company’s investment objectives and alignments with climate-focused initiatives and other policy-oriented goals.
“While investors are always free to buy cause-oriented products instead of focusing on maximum return, this settlement ensures that only investors who make a knowing choice will see their assets directed toward these non-financial goals,” said Skrmetti.
BLK Quitting ESG?
The latest moves shortly after BLK resigned from Net Zero Asset Managers, a group co-ordinating industry concerns on climate change.
The company said it left the group as it created confusion about its actions and led to legal questions.
Last week the company reported Fiscal fourth quarter earnings per share of $11.93, beating Wall Street’s estimate of $11.24 and rising 23% year-over-year.
Is BLK a Good Stock to Buy?
Overall, Wall Street has a Strong Buy rating on the stock, based on 13 Buys, two Holds and zero Sells. The average BLK price target of $1,176.71 implies about 17% upside potential from current levels, with the stock up around 30% in the last year.
