Documents obtained by The Dallas Express show that the City of Fort Worth stands out in terms of being BlackRock-free when it comes to its holdings.
Fort Worth’s public employee 457(B) Deferred Compensation Program has no investments in BlackRock. Likewise, unlike other jurisdictions, the company does not manage the programs’ assets. Part of this is likely due to the fact that the “City’s 457 Plan, while a deferred compensation plan, does not have city funds invested as there is no match for employees,” a document read.
However, this does mean that there is no connection between employee investments and the embattled multinational investment company, which has earned a reputation for its anti-fossil fuel ESG investing approach.
The Teachers Insurance and Annuity Association of America (TIAA) plays the broker role. TIAA’s role as recordkeeper revolves around tracking participant elections, which include deferral elections and investment directions. Since at least the mid-2010s, the investment direction has included a wide variety of companies and mutual funds.
One of these funds includes BlackRock’s “High Yield Bond Portfolio Institutional Shares.” However, BlackRock is just one of roughly a dozen funds in which the Fort Worth 457b program holds assets. Similarly, the revenue shares this fund has returned are small compared to the larger returns produced by other funds like Invesco Diversified Dividend R5.
SB 13, also known as the Investment Protection Act, is a 2021 Texas law that prohibits some state entities that service municipalities from investing in, having their investments managed by, or otherwise forming a contract with any company that discriminates against Texas oil and gas producers.
Pursuant to its passage, Texas State Comptroller Glenn Hegar identified BlackRock as one of 10 firms allegedly violating the law through ESG investing. The identification was predicated on BlackRock’s aggressive ESG strategy, which it had announced would have heavily prioritized alternative energy sources over fossil fuels as part of its Climate Action 100+ agenda. As DX reported, however, BlackRock has since scaled back this program.
Subsequently, BlackRock executives denied any discrimination against Texas energy producers.
“We have never turned our back on Texas oil and gas companies,” BlackRock executive Mark McCombe previously told the Financial Times.
Although the law does not apply to cities, it raises questions about how entities like the City of Houston, with its vast oil industry, choose to make investments.
Some state agencies have announced divestments from BlackRock in recent months because of SB 13. The Texas Permanent School Fund (PSF) broke ties with BlackRock in March.
“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,” State Board of Education chair Aaron Kinsey (R-Midland) said in a March statement announcing the sovereign wealth fund’s break with BlackRock.
Kinsey noted that the move was mandated and in “full compliance with Texas law,” as the “relationship with BlackRock was not in compliance with Texas Government Code Section 809, commonly referred to as Senate Bill 13.”
BlackRock claimed it was not forewarned of PSF’s decision before it was announced, but subsequent reporting by DX has called the validity of that claim into question.