Texas schools pull $8.5 billion from BlackRock over fossil fuel ‘boycott’

Texas public schools are withdrawing billions of dollars invested in BlackRock, an asset manager the state accuses of boycotting fossil fuels.

On Tuesday, State Board of Education Chairman Aaron Kinsey (R) announced that the board had divested $8.5 billion from BlackRock’s operations.

The company’s “overwhelming and enduring leadership” in the environmental, social, and governance (ESG) movement has given Texas’ public support agency, the Permanent School Fund (PSF), “an opportunity to drive the state’s oil and gas economy and revenues.” It is causing untold harm to the very companies that produce it,” Kinsey said in a statement.

The fossil fuel industry contributed about $26 billion in state and local taxes in 2023, about $1.8 billion of which went to the fund.

This means that about 80% of K-12 schools’ $2.2 billion annual budget comes from fossil fuel funding. (The fund has approximately $53 billion in total assets and is invested with third-party asset managers, including BlackRock.)

The anti-ESG movement in Texas and elsewhere is based on the idea that asset managers who don’t invest in fossil fuels are putting their clients’ investments at risk for politics — Kinsey is a similar story.

“PSF cannot afford to stand idly by while our financial future is attacked by Wall Street,” he wrote. “This bold action will help ensure that our PSF is indeed permanent and will continue to support bright futures and opportunities for generations of Texas students.”

In response, BlackRock accused Texas of also putting politics ahead of profits.

A BlackRock spokesperson said in a statement that the decision to divest state-owned assets from the company “ignores our $120 billion investment in Texas’ public energy company and ignores the advice of our experts.”

“As a fiduciary, especially for taxpayers, politics should never prioritize performance.”

The move comes after BlackRock CEO Larry Fink visited Texas in February, where he co-produced an energy event with Lt. Gov. Dan Patrick (R), as the state announced new gas This was done after offering to help find funds to build the factory.

BlackRock is also one of many banks to publicly scale back investments in climate change in the face of attacks from conservative politicians, and state Auditor Glenn Hegar (R) said the move He called it a “welcome development.”

But Patrick also called Hagar In 2022, it named BlackRock “at the top of the list of financial companies boycotting Texas’ oil and gas industry,” claiming that a 2021 Texas law prohibits state agencies from doing business with the company. .

Hagar did so. later that yearand company remain Published on the October 2023 list of companies not complying with the law.

Adrian Shelley, director of the left-leaning nonprofit Public Citizen, said the move to divest BlackRock from PSF amounted to a government obligation to support the fossil fuel industry.

“The state is essentially saying that private companies must invest in fossil fuels in order to do business with the state,” Sherry said. “It injects powerful political tactics into funds that benefit public schools.”

kinsey, but, told Reuters that fighting ESG is a matter of life and death for state schools.

“That money is primarily coming from the oil and gas industry,” he said. “If you don’t have oil and gas revenue and you don’t have $1 billion a year, that’s a problem for our fund and it’s clearly an existential long-term risk.”