Tennessee settled its consumer-protection lawsuit against BlackRock after the world’s largest asset manager agreed to increase transparency surrounding its emphasis on environmental, social and governance factors in investing.

Tennessee Attorney General Jonathan Skrmetti said Friday that he has dropped the 2023 complaint against Black Rock in exchange for a host of concessions, including disclosing the reasoning behind its proxy voting and casting votes “solely to further the financial interests of investors.”

The Republican Skrmetti said that “BlackRock’s stringent obligations under this settlement ensure Tennesseans will not see their retirement funds used to support radical ideologies they oppose.”

“This resolution assures that the money Tennesseans invest with BlackRock is managed consistent with the funds’ disclosures,” he said in a statement. “While investors are always free to buy cause-oriented products instead of focusing on maximum return, this settlement ensures that only investors who make a knowing choice will see their assets directed toward these non-financial goals.”

In its lawsuit, Tennessee accused BlackRock of misleading consumers by pursuing “aggressive strategies” to promote its ESG goals and overstating the financial returns on its ESG investing.

The asset manager, which has more than $40 billion invested in Tennessee companies, said it has “consistently acted in the best interests of our clients.”

“We’re pleased to resolve this matter,” said BlackRock in a statement. “BlackRock has consistently acted in the best interests of our clients, and we welcome the opportunity to demonstrate that fact through even greater transparency about our practices.”

The settlement comes with BlackRock under growing pressure to prioritize financial returns over its climate-change agenda.

Last week, a federal judge ruled that American Airlines violated its fiduciary responsibility by allowing BlackRock to use ESG considerations in its investment decisions for the airline’s employee retirement plans.

In addition, BlackRock recently said it would leave the Net Zero Asset Managers coalition amid an exodus by major banks and congressional scrutiny, including a House Judiciary Committee report released in June that found evidence of collusion between financial institutions and climate groups.

Will Hild, executive director of Consumers’ Research, called the settlement “another historic win for consumers and another blow to BlackRock’s attempt to force ESG policies on Americans.”

“Thank you to elected officials like Attorney General Skrmetti for continuing to push back on these radical political agendas,” said Mr. Hild. “Consumers’ Research will continue to fight against ESG elites like BlackRock CEO Larry Fink and others who continue to put politics over fiduciary duty.”

• Valerie Richardson can be reached at vrichardson@washingtontimes.com.