Texas has had a difficult relationship with many asset managers as of late. Starting about two years ago, the state began targeting asset managers that participate in climate pacts and those that consider ESG factors in their investments for divestment and state investigations. Some, like Vanguard, managed to avoid the ire of the state by publicly scaling back their support and involvement in climate groups. However, politicians across the state found a prime target in BlackRock the world’s largest asset management company. Recently the state pulled $8.5 billion of the Permanent School Fund from BlackRock’s management, alleging that the firm is “boycotting fossil fuels.” ESG Today reports that:
“The Texas State Board of Education announced on Tuesday the termination of an investment with BlackRock, pulling $8.5 billion in funds from the investment giant, with a statement by the Board’s Chairman Aaron Kinsey citing BlackRock’s ‘dominant and persistent leadership in the ESG movement.’”
For its part, BlackRock has rebranded its sustainability initiatives, retiring the term “ESG” from usage. However, this has not assuaged officials in Texas who see the firm as ideologically opposed to the Texas oil and gas industry despite its $120 billion stake in Texas public energy companies. Overall, its unclear whether BlackRock, which has over $10 trillion in assets under management, will feel any effect from the Texas divestment, but the asset manager did note increased scrutiny of ESG as a key risk factor on its quarterly results. Overall this may amount to little more than political theater on the part of the anti-ESG movement, but it’s hard to deny that divestment laws like Texas’, are one of the more effective pieces of political theater that we’ve seen from the movement. However, there probably won’t be much change in what BlackRock asks from their portfolio companies in terms of climate/ESG data, disclosures and actions – so it is best not to read more into this.
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