Texas Withdraws $8.5 billion From BlackRock Over ESG-Investment Practices
It was a bad day for BlackRock.
It was a bad day for BlackRock.
The Texas Permanent School Fund, an endowment fund established in 1845 to help boost public education, pulled its $8.5 billion investment from the asset-management giant BlackRock on Tuesday, saying its internal governance policies are harmful to the state’s energy industry.
Aaron Kinsey, chairman of the State Board of Education, issued a formal statement saying the New York company that bills itself as “one of the world’s preeminent asset management firms” is among the leaders in the movement known as “environmental, social and governance,” or ESG, and therefore under state law is ineligible for investments by Texas governmental entities.
“BlackRock’s dominant and persistent leadership in the ESG movement immeasurably damages our state’s oil and gas economy and the very companies that generate revenues for our PSF,” Kinsey wrote. “Texas and the PSF have worked hard to grow this fund to build Texas’ schools. BlackRock’s destructive approach toward the energy companies that this state and our world depend on is incompatible with our fiduciary duties to Texans.”
As the “environmental” component of ESG pushes climate cult pseudoscience, thereby hurting the fossil fuel industry that is a mainstay of the Texas economy.
Yet, BlackRock persists.
BlackRock, though, argues that it is helping millions of Texans and emphasized its investment in the state.
“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 $550 million [in] a joint venture with Occidental,” a spokesperson said in a statement provided to the Washington Examiner. “We recently hosted an energy summit in Houston designed to explore how to strengthen Texas’ power grid.”
The actual numbers argue otherwise:
The fossil fuel industry contributed about $26 billion in state and local taxes in 2023 — about $1.8 billion of which went into the fund.
That means fossil fuel money accounts for about 80 percent of the $2.2 billion annual budget of K-12 schools. (The total amount in the fund is about $53 billion, which is invested with thir-party asset managers like BlackRock.)
As a reminder, ESG is a financial concept that centers on imposing progressive priorities related to environment and social change through investment and divestment. The pushback against the policies and assumptions that underline EGS has damaged its brand so much that marketers recently decided to rebrand the whole concept as “Responsible Business.”
It looks like the administrators of Texas Permanent School Fund were the ones actually to practice “responsible business”.
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Comments
Why so late to the party, Texas?
I know, just a drop
It’s about time.
Always good when another State flexes it’s Sovereignty and chooses not to follow the old ‘go along, get along’ most politicians and bureaucrats prefer. We should welcome this move and encourage more of the same.
While $8.5 billion doesn’t seem like a huge amount by pulling it TX withdrawal became the single largest divestment from Blackrock to date by a State. We are well into the double digits of States pulling funds from Blackrock.
Of course the biggest hoard of pension plan assets is the Federal Gov’t Thrift Savings Plan managed by……yep, none other than Blackrock. Pulling those assets out of Blackrock would really hurt Blackrock’s bottom line. Unfortunately no previous President chose to do so despite common knowledge of ESG goals of net zero, anti fossil fuels dogma and boondoggles dating back before the Obama admin that were part of Blackrock’s investment philosophy.
I am not a financial professional.
My understanding is that if you have a fiduciary responsibility to your investors, your decisions must be focused only on increasing the value of you investor’s funds.
If you invest in nonsense like social justice, can you not be sued by your clients?
You would think so. I don’t know about the governance of this Texas fund, but most retirement plans are governed by fed law known as ERISA, which imposes the fiduciary standard you bring up. But Brandon’s DOL issued new regulations that allow plan fiduciaries to consider ESG factors. So our ruling class can now feel good about themselves while using OPM (other people’s money) and can hide behind DOL regs if anyone questions their fiduciary choices.
Additionally, the big financial institutions employ tame analysts who produce white papers claiming that such asinine policies do pay off, especially in the long run. Why not? Similar papers argue racial differences in average intelligence don’t exist.
Every red state should do the same.
Florida pulled out a year or so ago, a few other States have as well. Some 17 Red State AG are in litigation v Blackrock on the issue of ESG v fiduciary duty as referenced in the three above comments.
Wheels turn slowly, but occasionally do turn….
Thank you to Texas for this law and this action.
“Bad Day at Blackrock” 1955. Starring Spencer Tracy etal.
LOL at “Responsible Business.”
Orwell would be proud. HOW do they do it? Of all the awful things at which liberals excel, this inversion of language itself is sheer destructive genius.
Inversion of meaning takes better than more limited, or dare I say “nuanced” hijacking.
Not recalling where I got that from originally. BUT, it work: descriptive, good indicator, predictive, prescriptive.
Anne Francis couldn’t have said it better.