Last week, the office of the secretary of state in Mississippi via the Securities Division issued BlackRock with a cease-and-desist order arising from statements it made on both its non-ESG and ESG funds. ESG funds are those that integrate environmental, social and governance factors in their decision-making when it comes to investments.
In its cease-and-desist order, the division reprimanded the multinational investment company for deceptively marketing its ESG funds and explained that claims about ESG funds bringing in better financial returns were untrue. The securities division then revealed that the company’s non-ESG funds weren’t managed without regard for ESG criteria, as the company was committed to using all its managed assets to advance the agenda of decreasing carbon dioxide emissions to net zero.
The administrative order also includes a notice of intent to impose a penalty for all possible violations discovered. In addition to this, the division urged BlackRock to stop issuing dishonest statements while also halting its offers for securities from or in Mississippi.
In a response statement, BlackRock stated that it was committed to following all aspects of the law, especially since it operated in one of the most highly regulated industries in the nation. The company added that it was bound to make investments consistent with the choices of its clients, as well as applicable law and financial interests. BlackRock noted that its sole agenda was maximizing risk-adjusted returns for the funds its clients chose to invest in.
This cease-and-desist order comes as BlackRock wards off attacks from other GOP-led states over investing in ESG.
The state of Texas recently terminated a multibillion-dollar investment in BlackRock earlier this month. The decision, made by the chairman of Texas’ Board of Education, was focused on distancing Texas and public funds from institutions that boycotted the oil and gas sector.
Chairman Aaron Kinsey explained that BlackRock’s role in the ESG movement had greatly damaged the oil and gas economy in the state. This, he added, had indirectly affected companies that brought in revenues for the Permanent School Fund.
In Oklahoma, the multinational investment company was named as one of the financial companies that would be blacklisted for boycotting the oil and gas sector. This decision is based on the fact that the company applied ESG principles in its investment funds.
BlackRock has 30 days to dispute the allegations filed in Mississippi against it and its subsidiaries, which include BlackRock Advisors, BlackRock Investments, iShares Trust and BlackRock Fund Advisors.
The backlash that BlackRock is being subjected to for championing ESG doesn’t factor in the growing grassroots movement in the general public advocating for sustainable business practices, and this consciousness is driving the demand for products from companies such as Coyuchi Inc. that can be proven to be sustainably manufactured.
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