Attorney General Jonathan Skrmetti appeared in-studio on Tuesday’s edition of The Tennessee Star Report with Michael Patrick Leahy, where he laid out the reasons why BlackRock’s alleged double standards that they are pushing Environmental, Social, and Governance (ESG) initiatives that effectively force companies to shift their priorities are not just afoul consumer protection laws.
If left unchecked, Skrmetti argues, the opaque and unaccountable nature of corporate policymaking threatens the foundational principles of self-governance.
Michael Patrick Leahy: And welcome back to The Tennessee Star Report.
11:19 a.m.; in-studio attorney general, the fighter for Tennessee, Jonathan Skrmetti.
So, I love everything you’ve done about this lawsuit.
You’re suing BlackRock because they, on the one hand, say we are supporting ESG, and on the other hand, we’re trying to maximize profits.
No; they’re not doing both. They’re doing one.
And what I think is that they’re pushing unprofitable ESG activities – that’s what it looks like to me, as just a regular Tennessee citizen. And now, the big battle is you file the lawsuit in Williamson County Court, and they’re going to be represented locally by one of the top – I mean, the top law firm of Bass, Berry & Sims – that’s like, you know, the elite of the elite right here in Nashville.
Jonathan Skrmetti: They’re going to have a fierce team on their side.
Michael Patrick Leahy: But they’re going to be in Franklin, Tennessee. They’re not going to be in New York City. I like that about it, too.
But it looks to me like you’ve got the law on your side. I mean, there’s a Tennessee code about this, right?
Jonathan Skrmetti: Yes, our consumer protection law is there to make sure that people can make informed choices.
You know, I’m not one for the government having a heavy hand in commerce, but we’ve had consumer protection laws going back a long way. And that’s so that people can feel confident in the economy so they don’t have to worry about being tricked. They can go ahead and make choices about how to spend their money in an informed way.
And we have the tools to hold companies’ feet to the fire to make sure that they’re providing that transparency and clarity about what folks are going to get for their money.
Michael Patrick Leahy: Transparency and clarity. That’s the key here, it seems to me, because I think the terrible thing going on with BlackRock is that they’re forcing CEOs of Fortune 500 companies to engage in activities that the CEOs know aren’t profitable with all of the ESG activities that, that to me, I think is just unconscionable.
Jonathan Skrmetti: There was so much pressure unchecked for a long time, pushing companies to be. More and more focused on these social responsibilities and there was no pressure from the other side saying, ‘Hey, you’ve got one job to do. Your job is to protect the interests of your shareholders.’ And we’re seeing the backlash now.
I mean, I am not the only person looking at ESG. This is a national issue. People all over are concerned about this. And, of course, for the people on the other side who say, ‘Well, you just hate the environment. You’re trying to kill the planet.’
No, but it’s not the role of companies to decide what policy should be and certainly not for big financial companies to decide what policies everybody in a given industry should follow.
We have to have accountability. We live in a democracy, a republic where people elect the folks who make those decisions and they can unelect them if they don’t like the decisions that get made.
With ESG, you’re seeing that move into a much more opaque corporate environment where a small slice of people are able to make those decisions with no accountability.
And that’s a problem.
No matter what policies you want, they have to come through the democratic process with transparency, with accountability, with an opportunity for the people’s voice to decide the issue.
Michael Patrick Leahy: Well, and in this instance, at BlackRock, to me, it looks like Larry Fink, who runs BlackRock, is basically telling corporate CEOs, you know, I don’t want you to pursue the production of energy resources that I don’t like.
Well, what business is it of his to do that? I mean, there’s a recent report, for instance, you probably saw this. All this push with American companies to not use coal, not use coal, not use coal. We’ve seen in China, the use of coal is skyrocketing. In India, it’s skyrocketing. So all of this claim of forcing American companies not to have CO2 out there, it’s not working at all.
In fact, it’s benefiting our enemies. This is one of the things that I like about your lawsuit.
Jonathan Skrmetti: Well, yeah. And I mean, fossil fuels do a lot of good. There’s no doubt. I think there’s a very naive perspective on the ESG side. And if you look at the commitments that governments have made to various environmental outcomes, they’re not meeting their obligations at all.
I mean, everybody’s talking a huge game, but the kind of environmental impact that you see coming out of these international agreements would have a profoundly negative effect on quality of life for people in the near term. I mean, people would die as a result of the radical changes that would have to happen to get there.
But that’s not even what this suit is about. This is purely about trying to get BlackRock to come clean and not to say one thing to keep one side happy, one thing to keep the other side happy. So it’s a very simple case.
Michael Patrick Leahy: If you win the case and they concede that they’re not going to be pushing for ESG, they’re going to be pushing for maximizing shareholder profits, that will have a profound effect on the economy of the United States, right?
Jonathan Skrmetti: I think it might.
Michael Patrick Leahy: Now, where is this case going to go? I mean, so you file the lawsuit. What are the next steps in the process?
Jonathan Skrmetti: So, typically there will be a meeting with the judge for a scheduling order. They will probably file a motion to dismiss the lawsuit.
We’ll litigate that. There will be discovery, which is the ongoing process where we try to get information out of them, they try to get information out of us. If the case gets contentious, which it may well do, there’s a lot of fighting over discovery.
Michael Patrick Leahy: You said, ‘if the case gets contentious.’
Jonathan Skrmetti: It seems highly likely, but–
Michael Patrick Leahy: This case is going to be, like, this is going to be one of the big cases for the next couple years, don’t you think?
Jonathan Skrmetti: We’ll see. We’ll see.
You know, there’s a lot at stake here for Tennessee and a lot at stake for BlackRock. It, you know, there will probably be multiple appeals as it goes on, and it could take a really long time.
That’s just the nature of the legal system, especially when you have really good attorneys on the defense. So we’re, we’re not naive. This could drag on for quite some time, and we’re just going to stick with it and we’re going to see it through to the end.
Michael Patrick Leahy: The good news is you have more than six-and-a-half years left in your term.
Jonathan Skrmetti: Hopefully, we’re done by then.
Michael Patrick Leahy: Yeah, this has a feel of like another two or three years probably, don’t you think?
Jonathan Skrmetti: I mean, I hesitate to guess. There’s the potential it could take significantly longer than that. We just have to wait and see.
Michael Patrick Leahy: But BlackRock doesn’t want to lose this case.
BlackRock doesn’t want to admit that they’re doing, you know, they’re saying two different things that are inconsistent, right? They don’t want to admit that.
Jonathan Skrmetti: Well, I mean, I think there’s a lot of trouble that’s piled up. You know, if they do come out and say we were only following our fiduciary duty trying to maximize profit, that could get them into trouble with people who relied on their statements about the environment.
So they’re kind of stuck on two prongs of the dilemma here. You know, if they concede that they were actually going in one direction, the people who thought they were going in the other direction are going to be pretty unhappy about it.
Michael Patrick Leahy: You talked about fiduciary duty. I remember when I took economics my first year in college.
What’s the obligation of publicly traded corporations to maximize shareholder profits, right?
I mean, that’s the number one thing – the fiduciary duty of the CEOs.
And yet, time after time after time, these CEOs are being, you know, forced. I could use a different word. But they’re being forced by the heavy hand of Larry Fink and the guys at BlackRock to do things that limit their profits.
That, you see that all the time.
Jonathan Skrmetti: We’ve been through a weird time in the economy where, you know, folks lost the distinction between companies making money and policymaking. And companies don’t have to go out there and be aggressively evil, but their job is to make money for shareholders.
And if that gets compromised, the shareholders suffer. And if that gets compromised. Our government suffers. We are a self-governing people. And if companies start making these policy decisions about what is right and what other people can do, then we lose our ability to make those decisions for ourselves.
And we lose the heart of what it means to be an American.
Michael Patrick Leahy: See, I’ve got a little, I have a less-kind perspective on Larry Fink, because I don’t think Larry Fink is really interested in maximizing profits for the shareholders that invest in BlackRock. I think Larry Fink, is in the business of creating a world that looks like the way Larry Fink wants it to look like.
That’s what I think. And, look, I also think, Attorney General Skrmetti, that there will be other attorneys general that follow suit. But, you know, you’re leading the way here. Which is always good, right?
Jonathan Skrmetti: It’s good to be in front. It’s bad to be in front.
You know, I’m sure we’re going to have a very difficult time with this suit.
And BlackRock is an enormous company with enormous resources. It’s not a fight to be taken lightly.
Michael Patrick Leahy: Last question on this. Do you, yourself, appear as a litigator in these cases, or do you have somebody else?
Jonathan Skrmetti: So I would love to get back into court, but my management responsibilities are pretty broad, so I need people who can spend their lives doing nothing but this suit.
Michael Patrick Leahy: And on that, we’ll come back.
There’s more news going on with the attorney general. We’ll talk about that and more when we get back. This is The Tennessee Star Report. He’s attorney general of Tennessee, Jonathan Skrmetti. I’m Michael Patrick Leahy.
We’ll be right back.
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