Texas divests $8.5 billion from BlackRock, citing firm’s ‘destructive’ ESG push

The state of Texas notified investment management firm BlackRock on Tuesday of its plans to cancel an $8.5 billion investment, citing the company’s “disruptive” environmental, social and governance initiatives. fox business report.

Texas State Board of Education Chairman Aaron Kinsey told news outlets that the Texas Permanent School Fund, which previously invested in BlackRock, will withdraw its funding. Kinsey explained that this measure will ensure that PSF, a fund established to support public schools, complies with state law.

state passed Senate Bill 13 In 2021, it will ban “investments in companies that boycott specific energy companies.” The measure would require the state auditor to maintain a list of investment companies that boycott fossil fuel energy companies. November, Texas State Comptroller Glenn Hegar announced Five financial companies will be added to the list.

“Texas has acted as a leader in calling out investment companies for playing politics with the retirement benefits of hardworking Americans. Our goal has always been to engage in debates that are actually one-sided and intellectually dishonest to some degree.” It was about bringing that honesty,” Hegar said at the time.

“I wanted to end the double-talk by many companies and show the significant impact that fossil fuels have on our daily lives,” he added.

Fox Business reported that Hegar urged PSF and five state pension funds to end their relationships with BlackRock.

“The Texas Permanent School Fund has a fiduciary responsibility to protect Texas schools by protecting and increasing the approximately $1 billion in annual oil and gas royalties administered by the Texas General Land Office,” Kinsey said Tuesday. stated. “Terminating the agreement with BlackRock ensures that PSF is fully compliant with Texas law.”

Kinsey argued that “BlackRock’s dominant and persistent leadership in the ESG movement is causing untold harm to the state’s oil and gas economy and to the very companies that generate PSF’s revenue.” .

He accused the company of “taking a destructive approach to the energy companies that this country and our world depend on.” [which] That is inconsistent with our fiduciary responsibility to Texans. ”

This $8.5 billion represents a significant portion of PSF’s $53 billion endowment. Kinsey said the state and PSF “have worked diligently to increase this fund to build Texas schools.”

Texas’ decision to withdraw funding marks the largest divestment from BlackRock.

“Today marks a major step forward for Texas PSF and the entire state. PSF cannot afford to stand idly by while our financial future is attacked by Wall Street,” Kinsey said. “This bold action will ensure that our PSF remains truly permanent and will continue to support bright futures and opportunities for generations of Texas students.”

“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 local governments, including in the energy sector, including a $550 million joint venture with Occidental. “We recently hosted an energy summit in Houston where we planned to explore ways to strengthen Texas’ power grid,” the company added.

“Today’s unilateral and arbitrary decision by Board of Education Chairman Aaron Kinsey is a serious threat to Texas schools that have benefited from BlackRock’s long history of outperforming the Texas Permanent School Fund. It puts those families at risk,” Blacklock continued. “This decision ignores our $120 billion investment in Texas’ public energy companies and ignores expert advice. As fiduciaries, and especially for taxpayers, politics never trumps performance. should not do.”

Last year, BlackRock CEO Larry Fink declared that he would no longer use the “weaponized” term, saying it had become too politicized on both sides. . Reuters report. “I was embarrassed to participate in this conversation,” he said.

Arizona, Arkansas, Florida, Louisiana, Missouri, South Carolina, Utah and West Virginia also have similar sales.

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