Texas accuses BlackRock of energy company boycott in ESG clampdown


Texas has declared that BlackRock and 9 listed European monetary teams “boycott” the fossil gasoline business, a designation that might lead state pension funds with billions of {dollars} below administration to divest shares held in the teams.

The announcement by Glenn Hegar, Texas comptroller, escalates the marketing campaign in opposition to environmental, social and governance investing in Republican-led US states. Florida on Tuesday passed a resolution banning its pension fund managers from taking ESG issues into account with their investing methods.

The US’s largest producer of oil and fuel, Texas in 2021 handed a legislation that attacked ESG investing for probably hurting the business. The provisions require state pension and faculty funds to divest shares they maintain in monetary teams which, in the federal government’s view, “boycott energy companies”.

The legislation defines a boycott as “refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalise, inflict economic harm on, or limit commercial relations with a company” in the fossil gasoline business that has not made sure environmental pledges.

Besides BlackRock, the Europe-based monetary teams topic to divestment are BNP Paribas, Credit Suisse, Danske Bank, Jupiter Fund Management, Nordea Bank, Schroders, Svenska Handelsbanken, Swedbank and UBS. A listing of 348 mutual funds had been additionally marked for divestment.

The Teacher Retirement System of Texas says it’s the Twentieth-largest public pension fund in the world, with $160bn in property below administration. It holds roughly $28mn of BlackRock shares, or 0.3 per cent of the company, in response to Bloomberg.

“The ESG movement has produced an opaque and perverse system in which some financial companies no longer make decisions in the best interest of their shareholders or their clients,” Hegar said on Wednesday.

State pension funds should notify the comptroller of their direct and oblique holdings, however Texas legislation supplies some leeway over shares and mutual funds marked for divestment.

In a press release, BlackRock stated it disagreed with the comptroller’s resolution.

“This is not a fact-based judgment,” BlackRock stated, including that it has invested greater than $100bn in Texas energy corporations. “Elected and appointed public officials have a duty to act in the best interests of the people they serve.”

It added: “Politicising state pension funds, restricting access to investments, and impacting the financial returns of retirees, is not consistent with that duty.”

Among its different investments, BlackRock-managed funds are the second-largest shareholder in ExxonMobil, the oil supermajor that has its headquarters in Texas.

UBS stated it gave the comptroller proof that it doesn’t boycott energy corporations: “We firmly disagree with the comptroller’s decision to include UBS in this list.”

Credit Suisse stated in a press release it “is not boycotting the energy sector as the bank has ongoing partnerships and strong client relationships in the energy sector”. The different monetary teams weren’t instantly out there for remark. Texas funds have negligible holdings in UBS and Credit Suisse.

The Investment Company Institute, the US fund foyer group, additionally weighed in, saying the transfer “will only harm the ability of Texas police, firefighters, teachers, and other state civil servants to save for a secure financial future”.

Wednesday’s announcement doesn’t have an effect on BlackRock or the opposite 9 teams’ funding administration contracts with state pension funds. In the long run, these contracts should embrace a press release that the asset supervisor “does not boycott energy companies”, Texas stated. So lengthy because the contractor supplies these verifications, “the statute does not prohibit a state agency from contracting” with one of the ten monetary teams, the state added.

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