The state of Texas has terminated a massive $8.5 billion investment with trillion-dollar asset manager BlackRock due to the state's determination that the company was engaged in a boycott of energy companies.
In an announcement first shared with FOX Business, Texas State Board of Education Chairman Aaron Kinsey said the so-called Texas Permanent School Fund (PSF) delivered a notice to BlackRock on Tuesday, informing the New York City-based company of the action.
According to Kinsey, the move was made in accordance with a 2021 state law that seeks to distance the state and its large public purse from financial institutions that boycott the oil and gas sector.
“The Texas Permanent School Fund has a fiduciary duty to protect Texas schools by protecting and growing the nearly $1 billion in annual oil and gas revenues managed by the Texas General Land Office,” Kinsey said in a statement Tuesday. “Termination of the BlackRock contract ensures PSF’s full compliance with Texas law.”
“BlackRock's dominant and continued leadership in the ESG movement does immeasurable damage to our state's oil and gas economy and to the very companies that generate revenue for our Enterprise Support Fund. Texas and PSF have worked hard to grow this fund to build Texas schools.” BlackRock's destructive approach Rock on the energy companies that this state and our world depend on do not live up to our fiduciary duty to the citizens of Texas.”
The divestment represents a large share of the $53 billion Texas Social Security Fund, a fund created in the 19th century to support the state's public schools.
The action also represents the largest divestment of its kind since Republican-led states began terminating their financial relationships with BlackRock and other financial institutions over their pursuit of so-called environmental, social and governance (ESG) standards.
The ESG movement, which has gained momentum in recent years, calls for divestment from traditional energy industries and their conversion to… Green energy industries In combating global warming.
However, the ESG movement has faced significant resistance from both the energy industry and lawmakers at the state and federal levels.
As part of this response, Texas passed Senate Bill 13 in 2021, which requires the state comptroller to list financial companies found to be boycotting fossil fuel companies.
Texas Comptroller Glenn Hegar updated that list as recently as October, including BlackRock and several funds managed by the firm, and called on the Texas Permanent School Fund, as well as five state pension funds, to sever ties with the asset manager.
“Today represents a huge step forward for the PSF in Texas and our state as a whole. The PSF will not stand idly by while our financial future comes under attack from Wall Street,” Kinsey said Tuesday. “This bold action helps ensure our PSF will always remain a reality.” “He will continue to support bright futures and opportunities for generations of Texas students.”
BlackRock, which manages assets worth more than $10 trillion, has sought to defend itself in recent months from accusations that it is boycotting energy companies, noting that it still invests in traditional energy companies, but that environmental, social and governance factors are important because it serves clients with a group. Wide. Investment objectives.
Additionally, the company partnered with energy major Occidental Petroleum late last year on a carbon capture project in Ector County, Texas.
“BlackRock helps millions of Texans invest and save for retirement,” a BlackRock spokesperson told FOX Business. “On behalf of our clients, we have 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. We recently hosted a summit Houston Energy aims to explore how to strengthen Texas' power grid.
However, Texas' move was welcomed by Derek Crivels, CEO of the State Financial Officers Foundation, and Will Heald, executive director of consumer research, who have led nationwide opposition to ESG policies.
“The bold step taken today by Aaron Kinsey and the Texas Permanente School Fund, in accordance with state law, represents a powerful blow against ESG fraud,” Krevels said. “This is what happens when public fiduciaries stand up for those to whom they owe a duty, rather than bowing down to Wall Street asset managers who continue to abuse their market positions to advance extremist ideologies.”
“Under Larry Fink’s leadership, BlackRock had been misusing client money to advance a political agenda for years,” Heald added. “Never was it more egregious than in Texas, where BlackRock was simultaneously trying to destroy the local oil and gas industry while… It operates funds that rely on royalties derived from the same industry.” “It is difficult to imagine a more egregious breach of fiduciary duty.”
Heald said the Texas divestment sends a “clear message” that “Wall Street elites can no longer bully people into complying with the destructive ideology of ESG.”
Before the measure was announced on Tuesday, Arizona, Arkansas, Florida, Louisiana, Missouri, South Carolina, Utah and West Virginia had announced similar divestments.
The previous largest recall was in Florida, at $2 billion, which Florida Chief Financial Officer Jimmy Patronis announced in December 2022.
Some critics of the states' moves to distance themselves from BlackRock and other asset managers have argued that the actions hurt consumers.
For example, a Texas Chamber of Commerce study last week concluded that Texas' “fair access” laws would result in a loss of $668.7 million in economic activity and a reduction of 3,034 full-time permanent jobs.
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