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Mississippi Secretary of State Michael Watson sent a cease-and-desist letter<\/a> to BlackRock earlier this week over the asset manager\u2019s environmental, social, and governance (ESG) policies.<\/p>\n BlackRock \u201crepeatedly made false and misleading statements to Mississippi investors,\u201d according to a press release<\/a>. \u201cThese misrepresentations pertain to BlackRock\u2019s involvement in pushing ESG factors on portfolio companies.\u201d<\/p>\n \u201cInvestment companies will not push their political agenda on Mississippians, especially through fraudulent and deceptive means,\u201d Watson said. \u201cAll 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.\u201d<\/p>\n \u201cBlackRock 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,\u201d the letter reads. \u201cThese misrepresentations pertain to BlackRock\u2019s provision of investment services, especially its involvement in pushing Environmental, Social, and Governance (\u2018ESG\u2019) factors on portfolio companies. Additionally, many of BlackRock\u2019s acts, practices, and courses of business operate or would operate as a fraud or deceit upon investors and potential investors in Mississippi.\u201d<\/p>\n The asset manager\u2019s false statements \u201cfall into two main categories,\u201d the letter notes. The first \u201crelates to BlackRock\u2019s funds that are marketed as nono-ESG funds.\u201d<\/p>\n While BlackRock claims it doesn\u2019t use all funds for ESG policies, it has previously \u201ccommitted to use all assets under management to advance the environmental agenda of reducing carbon emissions to \u2018net zero.\u2019\u201d<\/p>\n The second false claim \u201crelates to BlackRock\u2019s funds that are marketed as ESG funds.\u201d BlackRock claims that ESG benefits clients\u2019 financial outcomes, although \u201cconsideration of ESG factors does not provide an indication of better financial returns or current or future risk profiles.\u201d<\/p>\n If the asset manager does not comply with the state\u2019s demands, Mississippi may \u201cimpose a multimillion-dollar administrative penalty.\u201d<\/p>\n BlackRock responded to the order in a statement<\/a>: \u201cMany policymakers and government officials have ideas on how we should invest our clients\u2019 assets. We are always bound to invest consistent with our clients\u2019 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. We operate in one of the most highly regulated industries in the country and are committed to following the law in every respect.\u201d<\/p>\n Last year, Tennessee Attorney General Jonathan Skrmetti filed<\/a> a\u00a0lawsuit<\/a>\u00a0against BlackRock.<\/p>\n The lawsuit was a response to the company\u2019s \u201cconflicting statements and assertions regarding ESG\u2019s influence over BlackRock\u2019s business decisions,\u201d according to a\u00a0press release<\/a>.<\/p>\n \u201cAs one of the world\u2019s largest investment-management firms, defendant BlackRock, Inc. has been at the forefront of using aggressive strategies to push controversial Environmental, Social, and Governance (\u2018ESG\u2019) goals across the assets it manages,\u201d the lawsuit read. \u201cBlackRock marketed many of its funds as devoid of ESG considerations and has admitted that ESG aims-in particular, radically reducing portfolio companies\u2019 carbon output-\u2018do not provide an indication of current or future performance nor do they represent the potential risk and reward profile of a fund.\u2019\u201d<\/p>\n<\/div>\n