Asset manager BlackRock agreed to new disclosure requirements about its use of sustainable-investment factors as part of a legal settlement with Tennessee Attorney General Jonathan Skrmetti, his office said on Friday.

BlackRock will increase its disclosure of proxy voting practices and has agreed to audits by a third-party service to ensure it adheres to the agreement. "The Attorney General has taken into consideration that BlackRock has taken various actions to clarify the role of ESG in BlackRock's investment processes and proxy voting decisions,

BlackRock has invested more than $41.7 billion in Tennessee companies and is the world’s largest asset manager.

The settlement ends a lawsuit that was originally filed in December 2023 by the state of Tennessee under the Tennessee Consumer Protection Act. The suit alleged that BlackRock overstated the financial benefits of ESG-related strategies and didn’t adequately disclose its integration of ESG factors.

Tennessee said it settled a lawsuit with BlackRock Inc. after accusing the world’s largest money manager of allegedly breaching consumer protection laws by making “misleading” statements about its ESG investment strategy.

BlackRock and the state of Tennessee on Friday reached a settlement over a lawsuit claiming the asset management firm downplayed how large a role environmental, social and governance proposals made in its investment process.