Dive Brief:
- The Texas Comptroller’s Office last week added five financial institutions to its running list of companies it says are boycotting the oil and gas industry, meaning they qualify for state divestment. Fifteen companies are now banned from new contracts with the state.
- Comptroller Glenn Hegar added Crédit Agricole, Societe Generale, AMP Limited, IMPAX Asset Management Group and Rathbone Investment Management to its list of institutions marked for divestment. The state removed Credit Suisse as it merged into UBS — another listed bank — this year.
- 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 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, BNP Paribas and BlackRock. The state added HSBC to its list in March.
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 have 30 days from the Nov. 1 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.
The firms Hegar added to the list last week are headquartered or based in Australia, France or the United Kingdom.
