Texas withdraws $8.5 billion from BlackRock, dealing a significant blow to the ESG movement

During an interview on ‘The Big Money Show,’ Wilton Simpson, the Republican Agriculture Commissioner of Florida, spoke about the investigation into U.S. banks regarding their ESG (Environmental, Social, and Governance) initiatives.

The State of Texas has made the decision to terminate its colossal $8.5 billion investment with BlackRock, a trillion-dollar asset manager. This action comes as a result of the state’s determination that BlackRock is actively participating in a boycott of energy companies.

The Texas State Board of Education Chairman, Aaron Kinsey, has informed BlackRock about the action taken by the Texas Permanent School Fund (PSF). This action is in accordance with a state law implemented in 2021 to separate the state and its significant public funds from financial institutions that boycott the oil and gas sector.

In a statement on Tuesday, Kinsey emphasized that the Texas Permanent School Fund has a responsibility to safeguard and enhance the annual oil and gas royalties managed by the Texas General Land Office, which amount to approximately $1 billion. This fiduciary duty is crucial in protecting Texas schools. Kinsey further stated that by terminating BlackRock’s contract, the PSF ensures full compliance with Texas law.

“BlackRock’s unwavering and influential role in driving the ESG movement has had a detrimental impact on our state’s oil and gas economy, as well as the companies that contribute to our Permanent School Fund (PSF),” he expressed. “Texas and the PSF have put in considerable effort to expand this fund for the betterment of our schools. However, BlackRock’s actions, which undermine the energy companies that Texas and the world rely on, are at odds with our responsibility to act in the best interests of Texans.”

BlackRock acknowledges that advocating for environmental, social, and governance (ESG) issues could potentially have negative consequences for its business.

In December, Texas Governor Greg Abbott named Aaron Kinsey as the chair of the Texas State Board of Education. This appointment comes after Governor Abbott signed Senate Bill 13, an anti-ESG (Environmental, Social, and Governance) measure, in June 2021. (Brandon Bell/Getty Images)

The divestment of a significant portion of the $53 billion Texas PSF, a fund established in the 19th century to aid public schools in the state, marks a substantial move. It also stands as the most significant divestment of its kind, as Republican-led states have started severing their financial associations with BlackRock and other financial institutions due to their commitment to environmental, social, and governance (ESG) principles.

The ESG movement has gained momentum in recent years, advocating for the redirection of investments from traditional energy industries to green energy industries as a means to combat global warming. However, both the energy industry and lawmakers at the state and federal level have strongly resisted the ESG movement.

BlackRock, a global investment management firm, has highlighted the significant impact of “mega forces” such as artificial intelligence (AI) and the transition towards green energy on the structural changes occurring in the economy. These transformative forces are reshaping industries and creating new opportunities for growth and innovation. According to BlackRock, these changes are not merely temporary disruptions but rather long-term shifts that will have far-reaching implications for businesses and investors alike. As the world continues to evolve, it is essential for individuals and organizations to adapt to these changes and embrace the opportunities they present.

Texas took a stand against companies that boycott fossil fuel companies by passing Senate Bill 13 in 2021. This legislation mandates the state comptroller to publish a list of financial institutions involved in such boycotts. In October, Texas Comptroller Glenn Hegar updated the list, which now includes BlackRock and various funds managed by the company. Hegar has urged the Texas Permanent School Fund, as well as five state pension funds, to cut ties with the asset manager.

“Today marks a significant milestone for the Texas Permanent School Fund (PSF) and our entire state. Kinsey, speaking on behalf of the PSF, emphasized that they will not passively endure the assault on our financial future by Wall Street. Instead, they are taking a proactive and bold approach to safeguard the PSF, guaranteeing its permanence. This move will enable the PSF to continue supporting the aspirations and prospects of countless generations of Texas students.”

Larry Fink, the chairman and CEO of BlackRock, delivered a statement during the opening remarks of the Texas Power Grid Investment Summit on February 6 in Houston.

BlackRock, with over $10 trillion in assets under management, has been facing allegations of boycotting energy companies. However, the company has been quick to clarify that it still maintains investments in traditional energy companies. It should be noted that BlackRock takes into account environmental, social, and governance (ESG) factors in its decision-making process, as it caters to clients with diverse investment objectives. In fact, the firm has even collaborated with Occidental Petroleum, a major energy company, on a carbon capture project in Ector County, Texas, demonstrating its commitment to sustainable initiatives.

BlackRock and State Street have been issued subpoenas as part of an investigation into their environmental, social, and governance (ESG) practices. This inquiry is being conducted by the House of Representatives, signaling a growing interest in the ESG space by lawmakers. The subpoenas were issued by the House Financial Services Committee, which is seeking information regarding the firms’ strategies, policies, and disclosures related to ESG investments. This move reflects a broader trend of increased scrutiny and regulation surrounding ESG investing, as investors and policymakers seek greater transparency and accountability in this rapidly growing sector.

“BlackRock is actively supporting millions of Texans in their investment and retirement saving endeavors,” shared a representative from BlackRock with FOX Business. “Our clients have entrusted us to invest over $300 billion in various Texas-based ventures, including companies, infrastructure, and municipalities. A significant portion of this investment, around $125 billion, has been allocated to the energy sector. In fact, we have also formed a joint venture worth $550 million with Occidental. Moreover, we recently organized an energy summit in Houston aimed at finding ways to enhance the resilience of Texas’ power grid.”

Derek Kreifels, the CEO of the State Financial Officers Foundation, and Will Hild, the executive director of Consumers’ Research, were thrilled by Texas’ decision. They have been at the forefront of the nationwide opposition to ESG policies.

According to Kreifels, Aaron Kinsey and the Permanent School Fund of Texas have taken a significant action against the ESG scam. Kreifels commends this bold step, stating that it demonstrates what happens when public fiduciaries prioritize their duty to the people over the manipulative tactics of Wall Street’s asset managers. Kreifels believes that such actions are necessary to counter the advancement of radical ideologies in the market.

Protesters gather outside the BlackRock headquarters in New York City on May 25, 2022, expressing their concerns. The investment management company has been caught in the crossfire of the ongoing environmental, social, and governance (ESG) debate.

According to Hild, BlackRock, under the leadership of Larry Fink, has been utilizing client funds to advance a political agenda for a considerable period of time. The situation was particularly concerning in Texas, where BlackRock attempted to undermine the local oil and gas sector while simultaneously managing funds that relied on royalties from that very industry. Hild asserts that this represents a blatant breach of fiduciary responsibility that is hard to overlook.

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