(Reuters) – Republican-led Tennessee and asset manager BlackRock (NYSE: ) have settled a dispute over how the company uses ESG factors in its investment decisions, according to a statement from Attorney General Jonathan Skrmetti on Friday.
BlackRock will increase its disclosure of proxy voting practices and has agreed to a third-party audit of the service to ensure it complies with the agreement.
“The Attorney General noted that BlackRock has taken various actions to clarify the role of ESG in BlackRock’s investment processes and proxy voting decisions,” according to the court filing.
The settlement ends a lawsuit filed by the state in December 2023 against the world’s largest asset management company.
“While investors are always free to purchase goal-oriented products rather than focusing on maximum returns, this settlement ensures that only investors who make an informed choice see their assets directed toward these non-financial goals,” Skrmetti said in a statement.
BlackRock’s stance on ESG — environmental, social and governance issues — has drawn sharp criticism from “red” states, which accuse the company of prioritizing their financial interests.
The company, however, denied these allegations. Its CEO Larry Fink said in 2023 that he stopped using the term ESG because of how weaponized it had become.
BlackRock said it was pleased to settle the dispute with Tennessee.
“BlackRock has consistently acted in the best interests of (its) clients, and we welcome the opportunity to demonstrate that fact through even greater transparency about our practices,” a company spokesperson said.
