Mississippi sent a cease-and-desist letter to BlackRock on Tuesday accusing the financial asset manager of misleading investors about its environmental, social, and governance policies and threatening to level a steep fine on the firm.
The letter, from Mississippi Secretary of State Michael Watson, says that BlackRock may face a multimillion-dollar financial penalty if it does not comply with the state’s demands. BlackRock, which manages over $10 trillion in assets, has faced increasing scrutiny from Republican officials over its investing policies, especially in relation to its links to climate activist groups.
“BlackRock has made and continues to make untrue statements of material fact, and to omit material facts to make its statements not misleading, to investors and potential investors in Mississippi,” a copy of the letter obtained by The Daily Wire says. “These misrepresentations pertain to BlackRock’s provision of investment services, especially its involvement in pushing Environmental, Social, and Governance (‘ESG’) factors on portfolio companies. Additionally, many of BlackRock’s acts, practices, and courses of business operate or would operate as a fraud or deceit upon investors and potential investors in Mississippi.”
Watson said that the letter and notice of intent to impose administrative penalty was part of Mississippi’s efforts to go after politicized investment companies.
“Investment companies will not push their political agenda on Mississippians, especially through fraudulent and deceptive means,” Watson said. “All citizens should have the opportunity to make informed and educated decisions when investing their hard-earned money. If not, our office will hold these bad actors accountable.”
The letter alleges that there are two categories of false and misleading statements made by BlackRock to investors. The first claims that while BlackRock says it doesn’t use all funds for ESG purposes it has already committed “to use all assets under management to advance the environmental agenda of reducing carbon emissions to ‘net zero.’”
The second category includes statements from BlackRock indicating that ESG-related investing brings positive financial results. Watson’s letter disputes this saying that is misleading “because the consideration of ESG factors does not provide an indication of better financial returns or current or future risk profiles.”
BlackRock has responded to the letter, saying that Mississippi’s allegations against it were untrue.
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“Many policymakers and government officials have ideas on how we should invest our clients’ assets,” BlackRock said. “We are always bound to invest consistent with our clients’ choices, their best financial interests, and applicable law. Our only agenda is maximizing risk-adjusted returns for the funds our clients choose to invest in.”
BlackRock, headed up by CEO Larry Fink, has walked back from some of its climate commitments, but has still faced calls to fully abandon ESG policies.
“Larry Fink and BlackRock continue to pretend that the only time they engage in ESG, it is with permission of the shareholders, but in reality, ESG policies have seeped into every facet of BlackRock’s asset management,” Will Hild of Consumers’ Research said in a statement to FOX Business on Wednesday. “They’ve been lying to their customers, and states like Mississippi are not going to allow this to continue.”