Texas Pulls $8.5 Billion From BlackRock Over ESG Investing - ESG Today (2024)
The Texas State Board of Education announced on Tuesday the termination of an investment with BlackRock, pulling $8.5 billion in funds from the investment giant, with a statement by the Board’s Chairman Aaron Kinsey citing BlackRock’s “dominant and persistent leadership in the ESG movement.”
BlackRock, as the largest global investment management company, and a leading voice in the investment community on climate and energy transition-related investment themes, has found itself at the center of a vocal anti-ESG movement by Republican politicians in the U.S., who have accused the firm of following a social agenda, or of “boycotting” and working to harm energy companies.
Texas has been one of the most active states at the forefront of anti-ESG initiatives, with recent actions including banning UK bank Barclays from the municipal bond market over its ESG policies, creating a list of asset managers for potential divestment for allegedly boycotting energy companies, as well as conducting a hearinggrilling executivesfrom BlackRock and State Street over their ESG and climate-related stewardship, engagement voting and investment practices.
While the state has become increasingly active in its anti-ESG advocacy, however, its actions may come at a significant cost to investors. While several states have introduced proposals to disallow ESG investing, many have faced pushback over the cost and estimated lost returns likely to result from these anti-ESG initiatives. An assessment by the Texas County & District Retirement System (TCDRS), for example, analyzing a proposed law last year at prohibiting ESG investing in the state’s public retirement investment system estimated that the legislation could cost the retirement system more than $6 billion over ten years in lost returns, and keep the system from partnering with top investment managers.
In a social media post following the Board of Education announcement, Senator Bryan Hughes, who filed the 2023 anti-ESG legislation and led the above-mentioned hearing, said:
“BlackRock and Wall Street firms like it have been using Texans’ money to push a left-wing agenda.
“Texas continues to fight back.
“That is why we’re pulling $8.5B from BlackRock, making it clear to Wall Street firms that they cannot use taxpayer money to hurt Texas jobs and attack our energy dominance.”
BlackRock and Wall Street firms like it have been using Texans’ money to push a left-wing agenda.
Texas continues to fight back.
That is why we’re pulling $8.5B from BlackRock, making it clear to Wall Street firms that they cannot use taxpayer money to hurt Texas jobs and…
In the statement, Kinsey said that the decision to terminate its investment with BlackRock was made in order to keep the Texas Permanent School Fund (PSF) in compliance with 2021 legislation, known as Senate Bill 13, which prohibits “investment in financial companies that boycott certain energy companies.”
Kinsey added:
“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.”
In a recent statement pushing back against claims made during a Republican presidential debate that BlackRock is pushing an ideological agenda and that it holds back energy companies from producing oil, BlackRock CEO Larry Fink highlighted the firm’s close ties with the energy industry, noting that the firm’s clients have invested over $170 billion in U.S. energy companies.
Despite the political pressure, however, BlackRock signaled earlier this year in its release of its 2024 engagement priorities that its engagements with companies would continue to include sustainability-focused topics such as “Climate and natural capital” and “Company impacts on people.” while also explaining that its approach to climate-related risks and opportunities focused on understanding the expected impact of these factors on companies’ strategies and long-term business models, and stressing that “it is not our role to engineer a specific decarbonization outcome in the real economy.”
In a statement following the Texas State Board of Education announcement, a BlackRock spokesperson said:
“Today’s unilateral and arbitrary decision by Board of Education Chair Aaron Kinsey jeopardizes Texas schools and the families who have benefited from BlackRock’s consistent long-term outperformance for the Texas Permanent School Fund. The decision ignores our $120 billion investment in Texas public energy companies and defies expert advice. As a fiduciary, politics should never outweigh performance, especially for taxpayers.”
The Texas State Board of Education announced on Tuesday the termination of an investment with BlackRock, pulling $8.5 billion in funds from the investment giant, with a statement by the Board's Chairman Aaron Kinsey citing BlackRock's “dominant and persistent leadership in the ESG movement.”
The company's “dominant and persistent leadership” in the environmental, social and governance (ESG) movement “immeasurably damages our state's oil & gas economy and the very companies that generate revenues” for Texas's Permanent School Fund (PSF), which supports the state's public schools, Kinsey said in a statement.
The Securities Division alleges BlackRock, through its ESG assertions, has repeatedly made false and misleading statements to Mississippi investors. These misrepresentations pertain to BlackRock's involvement in pushing ESG factors on portfolio companies.
However, recent trends have raised questions about its viability and future, prompting many to ask, is ESG investing dead? While declining investment flows, fears of greenwashing, and lack of regulatory policies in the US underpin investor uncertainty, this is likely a temporary pause rather than a permanent setback.
So far, Florida ($2 billion), Louisiana ($794 million), Arizona ($543 million), Texas ($500 million + $8.5 billion = $9 billion), Missouri ($500 million), South Carolina ($200 million), Arkansas ($125 million), Utah ($100 million), and West Virginia ($21.8 million) have made the decision to divest from BlackRock (a ...
The American Sustainable Business Council said the 2021 law known as Senate Bill 13 violates members' free speech rights by banning Texas from investing in or contracting with businesses that, in the state's view, "boycott" the oil and gas industry.
ESG stands for “Environmental, Social and Governance.” ESG can be described as a set of practices (policies, procedures, metrics, etc.) that organisations implement to limit negative impact or enhance positive impact on the environment, society, and governance bodies.
If companies fail to remain mindful of their ESG risks, it could result in a lack of interest from future investors, losing loyal customers who have grown more aware of societal and environmental issues, and potentially ignoring the requirement to comply with current environmental regulations – which can result in ...
Among the latest conservative culture wars is a crusade against environmental, social, and governance investing, a practice in which companies take into account non-financial factors like greenhouse gas emissions when making business decisions.
However, there are also some cons to ESG investing. First, ESG funds may carry higher-than-average expense ratios. This is because ESG investing requires more research and due diligence, which can be costly. Second, ESG investing can be subjective.
While it is true that Blackrock does not own houses or own companies that own houses, they do invest in companies that own houses. Blackrock owns 6.7% of American Homes for Rent, which owns 59,000 homes in the United States.
BlackRock's pullback is part of a broader move by large investment firms that are shying away from ESG strategies. They are doing so, at least in part, in response to attacks by Republican politicians like Florida Governor Ron DeSantis.
Texas passed two laws in 2021 that restrict government contracts with companies that take what state officials regard as punitive stances toward the fossil fuels and firearm industries.
The Texas State Board of Education announced on Tuesday the termination of an investment with BlackRock, pulling $8.5 billion in funds from the investment giant, with a statement by the Board's Chairman Aaron Kinsey citing BlackRock's “dominant and persistent leadership in the ESG movement.”
Even BlackRock Funds Buying Oil Stocks Are Banned by Texas ESG Fight. Texas bars its public pensions from investing in 350 funds run by asset-management giants such as BlackRock Inc.and Invesco Ltd. because a key Republican state official says they “boycott” the oil and gas industries.
Introduction: My name is Arielle Torp, I am a comfortable, kind, zealous, lovely, jolly, colorful, adventurous person who loves writing and wants to share my knowledge and understanding with you.
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