The state of Texas is cutting off a massive $8.5 billion investment in multitrillion-dollar asset manager BlackRock, citing the state’s determination that the company is involved 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) sent a notice to BlackRock on Tuesday that the New York City-based He said he had informed the company of this action.
Kinsey said the move was made in accordance with a 2021 state law aimed at steering the state and its vast public funds away from financial institutions that boycott the oil and gas sector.
“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. said in a statement. “Terminating the agreement with BlackRock ensures that PSF is fully compliant with Texas law.”
“BlackRock’s dominant and persistent leadership in the ESG movement is causing untold harm to the state’s oil and gas economy and the very companies that generate revenue for PSF. “We have worked hard to increase this fund to build Texas schools,” he continued. “BlackRock’s destructive approach to the energy companies this state and our world depend on is incompatible with our fiduciary responsibility to Texans.”
The sale makes up the bulk of the $53 billion Texas PSF, a fund established in the 19th century to support the state’s public schools.
The measure also marks the first divestment of its kind since Republican-led states began cutting financial ties with BlackRock and other financial institutions over their pursuit of so-called environmental, social, and governance (ESG) standards. By far the largest scale.
The ESG movement, which has gained momentum in recent years, calls for investment to be diverted away from the traditional energy industry and into other sectors. green energy industry In the fight against global warming.
However, the ESG movement faces significant resistance from both the energy industry and lawmakers at the state and federal level.
As part of that backlash, Texas passed Senate Bill 13 in 2021, requiring the state auditor to list financial companies found to be boycotting fossil fuel companies.
Texas State Comptroller Glenn Hegar recently updated a list in October that includes BlackRock and several funds it manages, including five state pension funds and the Texas Permanent Schools Fund. requested that the relationship be severed.
“Today marks a major step forward for Texas PSF and the entire state of Texas. PSF cannot afford to stand idly by while our financial future is attacked by Wall Street,” Kinsey said Tuesday. Told. “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.”
BlackRock, which manages more than $10 trillion in assets, has sought to defend itself in recent months from accusations that it is boycotting energy companies, continuing to invest in traditional energy companies but offering customers a wide range of services. He pointed out that the company takes ESG issues into account because it provides For investment purposes.
Additionally, late last year, the company partnered with major energy company Occidental Petroleum 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 in the energy sector, including a $550 million joint venture with Occidental. “We recently hosted an energy summit in Houston aimed at examining ways to strengthen Texas’ power grid.”
Still, Texas’ move was supported by Derek Kreifels, chief executive officer of the State Financial Officers Foundation, and Will Hild, executive director of Consumer Research, who have led the national push against ESG policies. .
“Today’s bold action by Aaron Kinsey and the Texas Permanent Schools Fund is a major blow against ESG fraud under state law,” Kreifels said. “Public fiduciaries like this stand up for the people they owe a duty to, rather than bow down to Wall Street asset managers who continue to abuse their market positions to promote extremist ideologies. Things happen.”
“For years, under the leadership of Larry Fink, BlackRock has misused customer funds to advance political agendas. Nowhere was it worse than in Texas. They were simultaneously trying to destroy the domestic oil and gas industry while operating funds that depended on royalties from the same industry,” Hild added. “It is difficult to imagine a more flagrant breach of fiduciary duty.”
Hild said the Texas divestment sends a “clear message that Wall Street elites can no longer bully people into conforming to their destructive ESG ideology.”
Prior to the action announced Tuesday, Arizona, Arkansas, Florida, Louisiana, Missouri, South Carolina, Utah and West Virginia announced similar sales.
The company’s largest sale to date was $2 billion worth of Florida operations announced in December 2022 by Florida Chief Financial Officer Jimmy Patronis.
Some critics of the state’s move to distance itself from BlackRock and other asset managers say the move harms consumers.
For example, a Texas Chamber of Commerce Foundation study released last week concluded that Texas’ “fair access” law would result in $668.7 million in lost economic activity and 3,034 full-time permanent jobs.
