Texas Terminates $8.5B Investment in BlackRock, ESG Movement Stunned

Earlier this week, Texas announced that it would be pulling the plug on its multibillion-dollar investment with BlackRock. This comes after the state determined that BlackRock was boycotting energy companies.

BlackRock is a multinational investment company and the biggest asset manager globally with trillions in assets under management.

Aaron Kinsey, chair of the state’s Board of Education, revealed that the decision was made in agreement with a 2021 state law focused on distancing Texas and its public funds from financial institutions that boycotted the oil and gas sector. In a statement, Kinsey stated that the state’s Permanent School Fund had a duty to protect schools in Texas by safeguarding and growing the roughly $1 billion in yearly oil and gas royalties managed by the state’s General Land Office.

Kinsey noted that terminating BlackRock’s $8.5 billion contract ensured that the fund was fully compliant with state law. He also explained that the investment company’s role in the Environmental, Social and Governance (ESG) movement significantly damaged Texas’ oil and gas economy as well as the very companies that generated revenues for the Permanent School Fund.

The divestment represents a significant share of the state’s Permanent School Fund, which was established in the 19th century to support public schools in Texas. This move also represented the biggest divestment since GOP-led states started discontinuing their financial ties to financial institutions such as BlackRock over their pursuit of ESG standards.

The ESG movement is focused on obtaining investments from fossil fuel diverted to green energy as the fight against global warming continues.

In 2021, the state approved Senate Bill 13, which directs that financial companies that boycott fossil-fuel companies be blacklisted by the state comptroller. In his statement, Kinsey added that this move helped ensure that the Permanent School Fund would continue supporting generations of students in the state.

In response, BlackRock released a statement highlighting that the unilateral decision by Kinsey ignored the $120 billion investment in public-energy companies in Texas and defied expert advice. It added that the decision jeopardized schools as well as families in the state that had benefited from its consistent long-term outperformance for the Texas Permanent School Fund.

The investment company maintained that it remained invested in traditional energy firms but factors in ESG matters as it served clients with different investment objectives. In 2023, the investment company partnered with Occidental Petroleum, a major energy firm, on a carbon capture project in Ector County.

A BlackRock spokesperson added that the company was helping millions of Texans save for retirement and investment, revealing that BlackRock had invested more than $300 billion in Texas-based companies, municipalities and infrastructure.

BlackRock seems to be encountering serious blowback in its efforts to champion ESG implementation. However, not all is lost as many companies, such as Prospera Energy Inc. (TSX.V: PEI) (OTC: GXRFF) (FRA: OF6B), are already implementing these principles given the wide-ranging benefits that such an undertaking can bring.

NOTE TO INVESTORS: The latest news and updates relating to Prospera Energy Inc. (TSX.V: PEI) (OTC: GXRFF) (FRA: OF6B) are available in the company’s newsroom at https://ibn.fm/GXRFF

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