The Texas Board of Education announced on March 19 that it would divest $8.5 billion in state funds from BlackRock, the world’s largest asset manager.
Aaron Kinsey, chairman of Texas State Board of Education said that the move was necessary to comply with the 2023 state law, known as Senate Bill 13, which prohibits the state from investing with companies that the state comptroller deems to be discriminating against fossil fuel companies.
Texas schools are now in the process of selecting new fund managers for the state’s Permanent School Fund (PSF), which had employed BlackRock up to this point.
“There are a number of entities that are in the financial services sector that are of scale and not on the boycott list put out by the comptroller,” Mr. Kinsey told The Epoch Times.
“So there are people we can do business with, and my view on that is we should be doing business with those whose values are aligned with ours and definitely not with those who are contradictory to our long-term interest.”
The more than 5 million children in the Texas school system receive approximately $1 billion each year through oil and gas royalties paid to the state, which pay for things like textbooks, he said.
“Texas and the PSF have worked hard to grow this fund to build Texas’ schools,” Mr. Kinsey stated.
“BlackRock’s destructive approach toward the energy companies that this state and our world depend on is incompatible with our fiduciary duty to Texans.”
The move sparked a scathing reply from BlackRock.
“The decision ignores our $120 billion investment in Texas public energy companies and defies expert advice.”
Many of the world’s largest fund managers including BlackRock have joined groups like the Net Zero Asset Managers Initiative (NZAMi), Ceres, and Climate Action 100+.
Members of these groups pledge to leverage the portfolios they manage to compel companies whose shares they own to get into alignment with net-zero climate goals, predominantly by targeting the fossil fuel industry.
By that law, state comptroller Glenn Hegar reviewed the actions and public statements of banks that served the state to assess their positions regarding the fossil fuel industry.
“A handful of companies are echoing promises by the Biden administration about a ‘transition’ to green energy,” Mr. Hegar stated at the time.
“They’ve managed to convince people that electric cars and wind and solar power generation can meet our energy needs, and if we just stop investing in oil and gas, the transition will be swift and painless.
“Even before the war in Ukraine, Americans were facing increasing energy prices resulting from artificial efforts to curb domestic energy production, and the Ukraine crisis has only highlighted the importance of protecting our domestic oil and gas sector,” he said.
“Numerous companies and their leadership are pushing an environmental and social agenda that not only threatens the Texas economy and jobs, but also undermines national security.”
It was a move that some believed signaled a shift away from its former advocacy for environmental, social, and governance (ESG) goals and “sustainable investing.”
Others, however, are waiting for more evidence that Wall Street has stepped away from political and social activism.
“It is true that they dropped out of this group, but they continue to talk out of both sides of their mouth,” Mr. Kinsey said. “It depends who their audience is.”
The Epoch Times contacted BlackRock to comment for this article but did not receive a reply as of press time.
