State Board of Education Cuts Off BlackRock

BlackRock building | Photo by Gary Hershorn/Getty Images

The chairman of the State Board of Education announced on Tuesday that the Texas Permanent School Fund is terminating its investment with BlackRock.

“The Texas Permanent School Fund (PSF) 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,” Chairman Aaron Kinsey stated.

“Today, PS leadership delivered an official notice to global asset manager BlackRock terminating its financial management of approximately $8.5 billion in Texas’ assets. Terminating BlackRock’s contract ensures PSF’s full compliance with Texas law,” Kinsey added.

Kinsey also alleged that BlackRock’s boycott undermines the integrity of the fund and the board’s duty to Texans.

“BlackRock’s dominant and persistent leadership in the ESG movement immeasurably damages our state’s oil & gas economy and the very companies that generate revenues for our PSF. Texas and the PSF have worked hard to grow this fund to build Texas’ schools. BlackRock’s destructive approach toward the energy companies that this state and our world depend on is incompatible with our fiduciary duty to Texans,” he added.

The Texas Permanent School Fund is a sovereign wealth fund composed mostly of oil and gas royalties, land, and other assets. It funds primary and secondary education in the Lone Star State. The fund’s total value is around $50 billion.

BlackRock served as an asset manager for roughly 20% of the fund.

In recent years, the company has been criticized for boycotting the oil and gas industry as part of its environmental, social, and governance (ESG) policies. ESG is a type of investing that considers the advancement of leftist social policies as a metric for performance along with profit. Some ESG adherents attempt to create environmental change by refusing to invest in certain energy producers, such as oil and gas.

Senate Bill 13, also known as the Oil & Gas Investment Protection Act, took effect in 2021 and forbids state and local governments from doing business with asset managers that discriminate against the oil and gas industry.

After the legislation took effect, Texas Lt. Gov. Dan Patrick wrote to State Comptroller Glenn Hegar, saying, “As you prepare the official list of companies that boycott energy companies, I ask that you include BlackRock, and any company like them, that choose to hurt Texas oil and gas energy companies by boycotting them in violation of Senate Bill 13.”

Subsequently, Hegar produced a list identifying BlackRock and nine other firms allegedly discriminating against Texas energy producers.

Other high-ranking Texas officials joined the coalition against BlackRock.

“Texas was the first state to ban BlackRock from doing business with our state. I signed a law in 2021 to ban financial companies that have ESG policies that discriminate against the oil & gas sector. That includes BlackRock and several other financial companies,” Gov. Abbott posted on X.

Additionally, Texas’ public school teachers’ pension, the largest in the state, jettisoned more than $500 million worth of investments in BlackRock, per The Dallas Morning News.

BlackRock vehemently denies that it has discriminated against Texas oil and gas.

“This is anti-competitive,” Mark McCombe, a BlackRock executive, told the Financial Times about its placement on Hegar’s divestment list. “We have never turned our back on Texas oil and gas companies.”

BlackRock was contacted for comment on this story and the newest developments, but a representative did not respond by the time of publication.

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