Texas school fund divests $8.5 billion from BlackRock over the company’s anti-fossil fuel position
The Texas Permanent School Fund (PSF) is officially severing ties with BlackRock, which has $10 trillion in assets under management, over the fund’s opposition to fossil fuels.
“BlackRock’s dominant and persistent leadership in the ESG [environment, social and governance] movement immeasurably damages our state’s oil & gas economy and the very companies that generate revenues for our PSF,” Chairman of the Texas Board of Education Aaron Kinsey said in a statement emailed to Just The News.
Texas passed a law in 2021 that prohibits state investment in companies that boycott energy companies. The board’s decision will pull approximately $8.5 billion in Texas’ assets from BlackRock.
“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 duty to Texans,” Kinsey said.
The Texas PSF has a balance of $52.3 billion, and it ranks 27th on the Sovereign Wealth Fund Institute’ list of the top 100 largest funds by assets.
In a statement, Derek Kreifels, CEO of the State Financial Officers Foundation, praised the decision as a “massive blow against the scam of ESG.”
“No matter whether it’s called ‘stakeholder capitalism’ or ‘transition investing,’ if the intent of an asset manager is to end America's oil and gas industry, then they can expect continued push back from conscientious public officials looking out for their constituents, " Kreifels said.
A BlackRock spokesperson told Just The News that the company is beneficial to the school fund’s financial outcomes and the state’s oil and gas industry.
“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 [and] $550 million in a joint venture with Occidental. We recently hosted an energy summit in Houston designed to explore how to strengthen Texas’ power grid,” the spokesperson said.
Critics of anti-ESG legislation argue that the laws ultimately hurt the economies of states that pass such laws. By reducing eligible firms that can bid on state contracts, critics say, it reduces competition and harms states.
A new study by the Texas Association of Business Chambers of Commerce Foundation concludes that Texas’ prohibition on public entities doing business with companies based on corporate governance policies resulted in higher interest rates in the bond market, producing a loss of $668.7 million in economic activity. This is on top of job losses and decreased state revenue.
However, proponents of these laws say that the impact of the ESG movement on the fossil fuel industry is far more detrimental to the economy than any impacts of laws that prohibit doing business with such firms.
Will Hild, executive director of Consumers' Research, said in a statement that BlackRock misused client funds to push a political agenda, which sought to destroy the domestic oil and gas industry while managing funds that depend on royalties from that industry.
“A more flagrant violation of fiduciary duty is difficult to imagine. By divesting $8 billion from BlackRock, Chairman Kinsey and the Permanent School Fund are not only fulfilling their role as fiduciaries to one of the largest education funds in the country but sending a clear message to Wall Street elites that people can no longer be bullied into complying with ESG's destructive ideology. I look forward to seeing many more states follow suit,” Hild said.