OKLAHOMA CITY – Although BlackRock invests billions of dollars in numerous energy companies and dropped its membership in a global investment coalition that has pressured companies to decarbonize, the world’s biggest asset manager is catching grief from both political wings.
BlackRock learned last week that its $8.5 billion investment contract with the Texas State Board of Education was terminated. The reason cited was BlackRock’s environmental, social and governance policies that Texas deems to be hostile to the energy industry.
Board of Education Chairman Aaron Kinsey made the announcement on FOX Business, explaining the Texas Permanent School Fund. The board delivered a notice to BlackRock on March 19, informing the New York Citybased firm of the decision.
“The Texas Permanent School Fund has a fiduciary duty to protect Texas schools by safeguarding and growing the approximately $1 billion in annual oil and gas royalties managed by the Texas General Land Office,” Kinsey said in a statement reported by FOX Business. “Terminating Black-Rock’s contract ensures PSF’s full compliance with Texas law,” Kinsey wrote.
Reportedly in February, Texas State Comptroller Glenn Hegar “strongly” urged five government employee pension funds to cut ties with “divestment list” companies – including BlackRock and UBS – that are seen as unfriendly to oil and gas, according to Bloomberg News.
BlackRock scaled back its ties to Climate Action 100+ by transferring its membership to an international entity, while JPMorgan Chase and State Street quit Climate Action 100+ outright.
Climate Action shifted its focus last summer: from exerting pressure on companies to disclose their net-zero progress, to efforts to compel them to reduce emissions.
State Street claimed the new priorities compromised its “independent approach to proxy voting and portfolio company management.” And BlackRock said the tactics “would raise legal considerations, particularly in the U.S.”
Collectively, the troika accounted for a withdrawal of nearly $14 trillion from an organization bent on marshaling Wall Street’s clout to expand the climate agenda.
BlackRock CEO Larry Fink pointed out that Texas leads the nation in both renewable and fossil fuel energy production.
In response to the Texas school fund action, Black-Rock issued this statement: “BlackRock is helping millions of Texans invest and save for retirement. On behalf of our clients, we’ve invested more than $300 billion in Texas-based companies, infrastructure and municipalities, including $125 billion invested in the energy sector, including $550 million in a joint venture with Occidental. We recently hosted an energy summit in Houston designed to explore how to strengthen Texas’ power grid.”
Fink said BlackRock invests $380 billion globally in fossil fuel concerns, while also investing in renewables favored by political progressives.
FOX Business’ Charlie Gasparino said the attacks on Fink are “absurd.”
BlackRock still on OK, WV blacklists Just last month, Oklahoma State Treasurer Todd Russ, the public official who manages the list of financial institutions banned from doing business with state entities because of their ESG policies, praised JPMorgan Chase, State Street, and BlackRock after they dropped their membership in Climate Action 100+.
Nevertheless, BlackRock remains on Oklahoma’s list of firms banned from handling investments of state agencies and the Oklahoma Public Employees Retirement System, even though BlackRock has significant investments in Oklahoma-based Chesapeake Energy, Vital Energy, ONEOK, Oklahoma Gas & Electric, and ONE Gas, parent company of Oklahoma Natural Gas Co.
Jordan Harvey, the treasurer’s chief of staff, told Southwest Ledger that Russ is “constantly evaluating” the “actions and behavior” of companies on the state’s blacklist – which was created by House Bill 2034, the Energy Discrimination Elimination Act of 2022. The treasurer is required by law to update the list annually but not more often than quarterly; his next deadline is this May.
Similar circumstances exist in West Virginia.
Two years ago, West Virginia Treasurer Riley Moore issued the first list of banned firms in that state after the Legislature created a law restricting financial institutions that were deemed unfriendly to fossil fuels. Moore accused BlackRock of putting Chinese interests over West Virginia’s and of encouraging companies to distance themselves from coal, oil and natural gas.
Yet West Virginia Public Broadcasting recently reported that BlackRock is financing the Mountain Valley Pipeline, which will convey natural gas from West Virginia to southern Virginia.
Fink said many BlackRock investments include what he called interests involved in “traditional” energy and power, and said it is important to balance both those and renewable sources in Black-Rock’s portfolio.
BlackRock blowback from left and right Meanwhile, Blackrock is receiving blowback from the left as well as the right.
New York City Comptroller Brad Lander sent a letter to BlackRock’s Fink earlier this year, warning that his investment actions don’t align with climate commitments.
Lander’s office said in a February press release that BlackRock is the largest manager of the city teachers, employees and board of education retirement systems, and that its current status does not align with a “net-zero” portfolio goal for 2040.
Tulsa’s Unit Corporation is one of eight oil and gas companies targeted by the New York State pension fund, which plans to unload its investments over the resistance of the energy firms to move to a low-carbon economy.
According to a report by the news agency Reuters, the divestment plan was confirmed by New York’s comptroller, who oversees retirement assets.
The $280 billion New York State fund is not a major investor in shale companies such as Unit Corp. But according to Reuters, it is the third-largest U.S. state pension fund and its decisions about investments are followed closely by other institutions.
The fund wants to divest or restrict its holdings in not only Unit Corp. but also ExxonMobil, Guanghui Energy Co., Echo Energy, IOG, Oil and Natural Gas Corp., Delek Group and Dana Gas. The fund had holdings of nearly $26.8 billion in those firms at the end of l ast year.
The New York State fund made a similar announcement in 2022, reporting it would sell $238 million in stock and debt held in 21 shale oil and gas companies. The step was taken because those oil and gas firms indicated they were not ready to move to a low-emissions economy.