Texas Board of Education chairman Aaron Kinsey explains why a school fund has ended its contract with Blackrock over their ESG policies.
FIRST ON FOX: A wide coalition of dozens of conservative groups and elected officials are backing Texas in response to the state’s decision to cancel an $8.5 billion investment with trillion-dollar asset manager BlackRock, a New York-based asset manager.
Led by the nonprofit State Financial Officers Foundation (SFOF), 43 groups and officials issued a public memorandum commending Texas State Board of Education Chairman Aaron Kinsey’s recent actions severing ties between BlackRock and the Texas Permanent School Fund. Kinsey said the move last month was made in accordance with Texas law, which seeks to punish banks that boycott the oil and gas sector.
“We believe that these actions were not only permissible, but that they were necessary under Texas state law and were demonstrably in the interest of the Texas schoolchildren the Permanent School Fund was founded to support,” the groups wrote. “When public officials actually swim against the tide and follow the law, they deserve thanks, not public insult, castigation and thinly veiled legal threats.”
SFOF’s memo – which was co-signed by Heritage Foundation President Kevin Roberts, Club for Growth Foundation President David McIntosh, American Accountability Foundation President Tom Jones and American Energy Institute CEO Jason Isaac, among others – noted that BlackRock has retaliated with a public letter and social media campaign after Kinsey announced the split.
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BlackRock has faced increasing pressure from Republican-led states to stop pursuing sustainability policies prioritizing green energy over fossil fuels. (Erik McGregor/LightRocket via Getty Images / Getty Images)
On March 21, two days after Kinsey made that announcement, BlackRock Vice Chairman Mark McCombe issued a letter to him saying the firm was “dismayed” and arguing the action puts “short-term politics over your long-term fiduciary responsibilities.” He defended BlackRock’s actions, stating they were in accordance with the law and that they do not engage in a boycott of the traditional energy sector.
A BlackRock spokesperson separately said in a statement at the time that Kinsey’s actions ignore the firm’s $120 billion investment in Texas public energy companies and “defies expert advice.”
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“Usually, when a customer fires a business, the business doesn’t insult the customer,” SFOF’s memo stated. “The business stops and asks what they can do to win the business back, how they can change to be better instead of publicly calling the customer to change.”
SFOF and the other groups outlined three substantive changes BlackRock needs to make to its business practices to conform with Texas law.
Larry Fink, chairman and CEO of BlackRock, makes a statement during the opening remarks of the Texas Power Grid Investment Summit in Houston on Feb. 6. (Kirk Sides/Houston Chronicle via Getty Images / Getty Images)
According to the coalition, BlackRock should withdraw from international organizations seeking to orchestrate opposition to fossil fuel investment, abandon “decarbonization” policies that are a form of boycotting fossil fuels and stop using its proxy voting authority to promote an anti-fossil fuel agenda.
Meanwhile, Texas’ divestment last month represents a large share of the $53 billion Texas PSF, a fund created in the 19th century to support the state’s public schools. The action also represents by far the largest divestment of its kind since Republican-led states began terminating financial ties to BlackRock and other banks over their pursuit of so-called environmental, social and governance (ESG) standards.
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The ESG movement, which has picked up steam in recent years, calls for investments to be pulled from traditional energy industries and diverted to green energy industries in the fight against global warming. However, the ESG movement has faced significant resistance from both the energy industry and lawmakers at the state and federal levels.
The U.S. and Texas flags stand in front of the Chevron Pasadena Refinery in Pasadena, Texas, on March 8, 2020. (Sharon Steinmann/Bloomberg via Getty Images / Getty Images)
As part of that pushback, Texas passed Senate Bill 13 in 2021, requiring its state comptroller to list financial companies found to boycott fossil fuel companies. Texas Comptroller Glenn Hegar most recently updated that list in October, including BlackRock and several funds managed by the firm, and has called on the Texas PSF, in addition to five state pension funds, to sever ties with the asset manager.
“If BlackRock wants to do business with Texas, they would be wise to follow Texas law, instead of slandering the public officials who are charged with upholding and carrying it out,” SFOF CEO Derek Kreifels told FOX Business. “SFOF commends Comptroller Hegar and Chairman Kinsey and the other brave men and women who are keeping their oath of office to uphold the law and uphold their fiduciary duty.”
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BlackRock did not immediately respond to a request for comment.
