Dive Brief:
- The Texas Permanent School Fund is adopting an “ESG skeptical” proxy voting matrix which pushes back on ESG resolutions put forward during annual shareholder meetings, the fund announced Monday.
- The new matrix — offered through Institutional Shareholder Services, the fund’s external proxy voting manager — will take effect immediately and be used to cast votes on behalf of the fund during the first half of the year, according to Texas PSF. The matrix was established “in response to widespread criticism” that ISS’s voting policies supported too many ESG shareholder resolutions, the fund said in the release.
- Texas PSF, which manages over $53 billion in assets and distributes nearly $2.2 billion to Texas K-12 schools annually, said it was among the first to adopt the matrix, which provides specific proxy voting guidance. The new strategy is now poised to impact the 40,000-50,000 proxy votes the fund casts every year.
Dive Insight:
In addition to offering the proxy voting matrix, ISS will also produce a report for the Texas PSF Corporation so it can conduct an annual review to ensure that the fund’s proxy votes comply with the matrix. The organization is a “special-purpose” governmental corporation — an entity that serves limited functions like public transportation or water and sewer services — created in 2021 that oversees the managing and investing of assets in the fund.
“ESG efforts have targeted Texas’ oil and gas economy, the very industry that generates the revenues that make the PSF an essential resource for Texas public schools,” Aaron Kinsey, the chairman of the state’s board of education and the corporation’s strategic planning and policy committee, said in the release. “We are making sure our votes are not cast in a way that is incompatible with our fiduciary duty to Texas.”
The matrix’s implementation comes shortly after Texas PSF pulled its $8.5 billion investment from BlackRock last month. The fund attributed the divestment to the asset manager’s alleged boycotting of fossil fuel and energy companies and said it terminated its two investment management services contracts to comply with Senate Bill 13.
SB13, a Texas law which passed in 2021, requires governmental organizations in the Lone Star State to stop doing business with companies that take actions to “limit commercial relations” with fossil fuel companies.
Though the fund’s press release did not mention the specific proxy voting guidelines that come under the matrix, the announcement was applauded by both Texas PSF Chair Tom Maynard and Texas Land Commissioner Dawn Buckingham, also a Texas PSF board member. In separate statements, Maynard and Buckingham each said the policy represents “Texas values,” and will safeguard management of the state’s mineral, oil and gas assets.
