A Texas state fund for public schools has ended $8.5 billion in investment management contracts with BlackRock Inc. over the firm's alleged "boycott" of energy companies.
The Texas Permanent School Fund Corp. said in a March 19 statement that the divestment complies with a 2021 state law that prohibited state and municipal agencies from doing business with asset managers that include environmental, social and governance criteria in their investment risk assessments.
"Companies pushing anti-Texas policies and woke indoctrination have no place in Texas public education, whether in the classroom or as investments in Texas Permanent School Fund," Tom Maynard, the corporation's chairman, said in a statement. "We will continue to defend our Texas values while generating more resources to support the school children of Texas."
The head of the Texas State Board of Education, Aaron Kinsey, who administers the fund, weighed in on the social media app X to say that BlackRock's "dominant and persistent leadership in the ESG movement" is damaging the state's oil and natural gas industry. Kinsey also took credit for leading the effort to cancel the contracts.
The world's largest asset manager with $10 trillion to its name, BlackRock has pointed to the $170 billion it has invested in the US energy industry to date — most of it in Texas. The company fired back at the school fund's decision, calling it ill-conceived.
"Today's unilateral and arbitrary decision by ... Kinsey jeopardizes Texas schools and the families who have benefited from BlackRock's consistent long-term outperformance for the Texas Permanent School Fund," the firm said in a statement. "The decision ignores our $120 billion investment in Texas public energy companies and defies expert advice. As a fiduciary, politics should never outweigh performance, especially for taxpayers."
The school fund's 2023 annual report shows BlackRock's investment management outperforming benchmarks.
Just days earlier, a study published by the Texas Association of Business, the state's chamber of commerce, found that Texas anti-ESG laws have left municipalities with $270 million in additional bond issuance costs annually.
Texas has been one of the most vocal voices in a nationwide Republican-led movement to oust ESG criteria and climate risk assessments from investment decisions affecting pension funds and other state assets. In addition to the 2021 energy law, the state the same year enacted legislation prohibiting state agencies from doing business with financial firms found to discriminate against firearms industries.