Texas will pull some $8.5 billion in investments from BlackRock over its ESG policies, the biggest such divestment after several Republican states have moved to cut ties with firms that conservatives see as privileging liberal goals.
Texas State Board of Education Chairman Aaron Kinsey announced the move on Tuesday. A letter was sent to BlackRock the same day notifying the world’s largest money manager. [emphasis, links added]
The divestment was done to comply with the state’s anti-environmental, social, and governance law, which prohibits state investment in companies like BlackRock that Republicans say boycott energy companies.
“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 [Permanent School Fund],” Kinsey said. “Texas and the PSF have worked hard to grow this fund to build Texas’s schools.”
“BlackRock’s destructive approach towards the energy companies that this state and our world depend on is incompatible with our fiduciary duty to Texans,” he added.
BlackRock, though, argues that it is helping millions of Texans and emphasizes 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.”
ESG is a financial concept that centers on compelling social change through investment and divestment.
It is a corporate model that doesn’t solely look at maximizing profit but also incorporates other elements into financial decisions — for instance, how an investment might affect fossil fuel emissions.
Top photo by Anne Nygård on Unsplash
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Republican states have moved to cut ties with firms that conservatives see as privileging liberal goals.
It isn’t just following “liberal goals”. It’s that Blackrock and others who use ESG as their investment standard are not doing their fiduciary duty for those who give their retirement and other investment money and expecting them to invest in ways to maximize their investments. ESG does nothing like that. So it is in the interest of these conservative states to put their money into investment companies who actually remember their fiduciary duties to their investors.