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BlackRock is now hit with 54 counts of securities violations by Indiana Secretary of State Diego Morales, sources confirm.

August 28, 2024 / Frank Nez

BlackRock manages funds for the Indiana Public Retirement System and over 415,000 Indiana residents, according to an order from Morales.

The cease-and-desist notice outlines a total of 54 violations of Indiana securities laws related to the firm’s claims about its ESG (Environmental, Social, and Governance) integration, which are said to contradict disclosures made for non-ESG funds.

Despite some disclosures indicating that certain funds do not use ESG strategies, BlackRock has made various statements committing to incorporate ESG considerations across all its managed assets, including efforts towards net-zero goals.

Morales stated, “My office is committed to rigorously enforcing the law and ensuring that Hoosier investors are protected from those who exploit the system.”

In response, BlackRock called the order a “politically motivated attack” that misrepresents its investment approach.

BlackRock emphasized its focus on helping Indiana clients achieve their investment objectives and stated its intention to defend against what it views as an arbitrary use of state power.

The order also highlights BlackRock’s membership in the UN-backed Net Zero Asset Managers initiative (NZAM), which commits signatories to implement strategies aimed at achieving net-zero emissions by 2050.

Additionally, it mentions BlackRock’s involvement with CA100+, a group that has seen several members exit recently, including JPMorgan and State Street.

The order asserts that, as the world’s largest asset manager, BlackRock wields significant proxy voting power to enforce its ESG standards but has often downplayed its activities.

According to its latest investment stewardship report, BlackRock supported only 4% of environmental and social-related shareholder proposals in the 2024 proxy season, a decline from 7% in 2023 and 21% in 2022.

The order also references previous findings by the Indiana State Treasurer’s Office, which cited BlackRock’s NZAM membership as evidence of its ESG commitments.

Still, Morales believes BlackRock has exploited the system.

Last year, the SEC charged BlackRock with failing to properly disclose investments by a publicly traded fund it advised.