With some major investment firms boycotting energy companies, the state of Texas is fighting back, pulling $8.5 billion in assets from global asset manager BlackRock.
This movement has been referred to as “Environmental, Social, and Governance” investing.
Put simply, ESG investing is a form of “stakeholder capitalism,” which prioritizes investments based on social or political desires rather than strictly on profits.
State Board of Education Chairman Aaron Kinsey announced Tuesday that BlackRock was not in compliance with Senate Bill 13—legislation signed into law last year that prohibits state funds from being given to organizations that boycott energy companies. As a result, the state will divest its Permanent School Fund from BlackRock.
“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,” wrote Kinsey.
“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. 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.
“Today represents a major step forward for the Texas PSF and our state as a whole. 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 added.
In a statement, BlackRock denied boycotting any companies.
“BlackRock is helping millions of Texans invest and save for retirement. On behalf of our clients, we’ve invested more than $300 billion in Texas-based companies, infrastructure and municipalities, including $125 billion invested in the energy sector, including a $550 million joint venture with Occidental,” their statement reads.
