Dive Brief:
- The Texas Comptroller’s office added five new firms to its list of financial institutions who “boycott the oil and gas industry” last week, meaning they qualify for state divestment. Fifteen companies are now banned from doing business with the state.
- State Comptroller Glenn Hegar added AMP Limited, Crédit Agricole SA, IMPAX Asset Management Group PLC, Rathbone Investment Management Ltd. and Societe Generale SA to the list of institutions marked for divestment. Credit Suisse was removed as it was folded into UBS Group AG this summer, which is already named in the list.
- Hegar cited the continued outflows from the sustainable fund market, a trend maintained in this year’s third quarter, as evidence of the “tremendous progress” the state and the broader anti-ESG movement have made. BlackRock is the only U.S.-based firm mentioned on the list.
Dive Insight:
The divestment list was created by a 2021 Texas law requiring the state to cease doing business with companies that take actions to “limit commercial relations” with fossil fuel companies. The first iteration of the list was released last August and mentioned 10 companies, including Credit Suisse, UBS and BlackRock. The London-based HSBC Holdings was added to the list in March this year.
The state’s $200 billion Teacher Retirement System, retirement funds for state, municipal, county and district and emergency services employees and a Texas Permanent School Fund all have 30 days from the list update to divest from the newly listed funds. The state agencies and funds are also required to submit a report to the state Senate and House and the Attorney General's office no later than Jan. 5 of every year, which outlines all divestments made.
Around 350 funds from the listed companies also qualify for state divestment. Hegar said his goal is to “show the critical impact that fossil fuels have on our daily lives.”
“We are getting real data showing the underperformance of investments that shun fossil fuels,” Hegar said in a release. “Proxy votes by big fund managers in support of ESG initiatives have dropped precipitously. … These are wins that show the impact Texas and other states are having.”
BlackRock’s continued inclusion on the list comes over fervent objections. After being included on the initial list last year, an executive at the firm told the Financial Times Blackrock had $290 billion invested in the state’s fossil fuel industry, making it the largest investor in the sector, and said the company has “never turned our back on Texas oil and gas companies.”
Before Hegar crafted the initial list, Republican Lt. Gov. Dan Patrick wrote the comptroller a letter last January, urging the inclusion of BlackRock “and any company like them.”
“Committing to a ‘net zero’ carbon strategy is beyond applicable environmental standards in federal and state law,” Patrick wrote. “Therefore, BlackRock is boycotting energy companies by basing investment decisions on whether a company pledges to meet BlackRock’s ‘net zero’ goals.”
While the Teacher Retirement System divested all its funds from BlackRock’s stocks, the firm still managed $4 billion of the retirement fund’s assets as of February.
BlackRock remains the only American institution marked by the state, as the firms Hegar added are all headquartered or based in Australia, France or the United Kingdom.
