BlackRock's Stand Against Fossil Fuels Now Costing It in Big Way as Texas Makes Its Move
Texas Republicans have made it clear what they won’t tolerate when it comes to handling state funds.
The Lone Star State announced Tuesday it was terminating an $8.5 billion investment with the global asset manager BlackRock because it believes the firm is engaged in a boycott of oil and gas companies, Fox Business reported.
The announcement came from Aaron Kinsey, the Republican chairman of the Texas State Board of Education. The investment, made on behalf of the Texas Permanent School Fund, was part of the state’s endowment established in 1845 to aid public education.
Kinsey said the move was in compliance with Senate Bill 13, a state law passed in 2021 preventing Texas government funds from going to financial institutions that boycott the oil and gas industry, according to Fox Business.
“The Texas Permanent School Fund (PSF) has a fiduciary duty to protect Texas schools by safeguarding and growing the approximately $1 billion in annual oil and gas royalties managed by the Texas General Land Office,” the SBOE chief said in a statement.
“BlackRock’s dominant and persistent leadership in the ESG movement immeasurably damages our state’s oil & gas economy and the very companies that generate revenues for our PSF,” he said.
“Texas and the PSF have worked hard to grow this fund to build Texas’ schools. BlackRock’s destructive approach toward the energy companies that this state and our world depend on is incompatible with our fiduciary duty to Texans,” Kinsey said.
“The PSF will not stand idle as our financial future is attacked by Wall Street. This bold action helps ensure our PSF remains in fact permanent and will continue to support bright futures and opportunities for generations of Texas students,” he concluded.
Today, Texas Permanent School Fund leadership delivered an official notice to global asset manager BlackRock terminating its financial management of approximately $8.5 billion in Texas’ assets.
My statement: pic.twitter.com/wf79a1jZlf
— Aaron Kinsey (@AaronKinseyTX) March 19, 2024
Under ESG, investments are shifted from the traditional energy industry, such as oil and gas companies, to so-called green energy firms in the name of fighting climate change.
On its website, BlackRock indicates the “environmental” section of its ESG stance covers “themes such as climate risks, natural resources scarcity, pollution and waste, and environmental opportunities.”
“Because we believe that climate risk is investment risk, BlackRock’s active portfolio managers seek to understand how they can use environmental, social, and governance (ESG) data as a lens to identify new risks and opportunities, and to build more resilient and better performing portfolios,” it says.
The company, which has received pushback for its embrace of such policies, responded to Texas’ move with a statement on Tuesday.
“Today’s unilateral and arbitrary decision by Board of Education Chair Aaron Kinsey jeopardizes Texas schools and the families who have benefited from BlackRock’s consistent long-term outperformance for the Texas Permanent School Fund,” it said, according to Fox Business.
“The decision ignores our $120 billion investment in Texas public energy companies and defies expert advice,” BlackRock said. “As a fiduciary, politics should never outweigh performance, especially for taxpayers.”
Will Hild, executive director of the nonprofit Consumers’ Research, said the company has been mishandling investors’ money in service of politics for quite some time.
“Nowhere was that more egregious than in Texas, where BlackRock was simultaneously trying to destroy the domestic oil and gas industry while managing funds that depended on royalties derived from that very same industry,” Hild said, according to Fox Business. “A more flagrant violation of fiduciary duty is difficult to imagine.”
In a January 2022 letter, Texas Republican Lt. Gov. Dan Patrick asked state Comptroller Glenn Hegar to put BlackRock “at the top of the list of financial companies that boycott the Texas oil & gas industry.”
“When the Senate passed Senate Bill 13, we made it clear that Texans will not tolerate Wall Street turning its back on our flourishing oil and gas industry and the millions of Texans who rely upon it,” Patrick said in a statement at the time. “As long as I am Lt. Governor, I will never back down from defending our oil and gas industry and I remain committed to ensuring Texas is the top state for oil and gas in America.”
What kind of message is Texas sending?
It won’t tolerate state funds being used for companies’ left-wing ESG initiatives.
If you plan on going against oil and gas, Texas won’t do business with you.
BlackRock doesn’t yet have a hold on all Americans to the point where they can’t escape. Texas is making the right move at a time when other state governments and regular people need to see bold action taken.
Too often, it seems there is an attitude among conservatives to “grit your teeth and bear it” when it comes to dealing with biased corporate or state initiatives that may run afoul of our values.
“Is it really so bad?”
We are encouraged to go along with policies we disagree with for the sake of practicality, fearing to venture into the unknown that comes from saying “enough.”
It seems Texas has had enough.
Unfortunately, while BlackRock hates to lose a massive portfolio from the state, it still embraces ESG — as do plenty of other financial institutions.
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