The State of Texas on Tuesday said it is pulling its massive $8.5 billion investment with trillion-dollar asset management firm BlackRock for allegedly engaging in boycotting fossil fuel energy producers in the state.
BlackRock has denied it is engaged in any boycott and called the move arbitrary. The firm also said the move ignores the company's $120 billion investment in Texas public energy companies, as first reported by Fox Business.
"BlackRock is helping millions of Texans invest and save for retirement," a BlackRock spokesperson told FOX Business. "On behalf of our clients, we've 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 an energy summit in Houston designed to explore how to strengthen Texas' power grid."
However, Texas State Board of Education Chair Aaron Kinsey said its latest move is in accordance with a 2021 state law that says state agents should divest from fund managers that shed investments to reduce greenhouse gas emissions.
"The Texas Permanent School Fund has a fiduciary duty to protect Texas schools by safeguarding and growing the approximately $1 billion in annual oil and gas royalties managed by the Texas General Land Office," Kinsey said in a statement.
"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. Texas and the PSF have worked hard to grow this fund to build Texas' schools," he added.
The divestment represents by far the largest divestment of its kind since Republican-led states began cutting financial ties to institutions that pursue ESG standards.
What Is the ESG Movement?
The ESG movement, which stands for environmental, social, and governance, refers to a growing trend among companies making commitments to investing in green energy industries in the fight against global warming. The movement is sometimes referred to as sustainable investing, impact investing, or socially responsible investing, according to Investopedia.
"At its core, ESG investing is about influencing positive changes in society by being a better investor," Hank Smith, head of investment strategy at The Haverford Trust Company, said, as quoted by Forbes.
The movement has faced significant resistance from the energy industry and lawmakers. In Texas, lawmakers passed Senate Bill 13 in 2021 that requires its state comptroller to list all financial companies found to boycott fossil fuel companies.
