As state leaders continue to recognize and take action to mitigate investment risk caused by woke ESG — environmental, social and governance — policies, the Texas State Board of Education has delivered a significant blow to the world's largest asset manager, BlackRock, due to its embrace and prioritization of "green" energy (read: anything but green) and attempts to force a transition to a "net-zero" carbon emission economy.
Led by Chairman Aaron Kinsey, the Texas State Board of Education found that BlackRock was not in compliance with a provision in Texas state code that prohibits state investment in companies that boycott energy companies, a practice that Kinsey found BlackRock's emphasis on ESG has created.
As a result, the Permanent School Fund (PSF) took action on Tuesday, notifying BlackRock that it was divesting a whopping $8.5 billion from the firm — the largest single divestment from BlackRock since state leaders began rejecting asset management firms with values that run opposite their states' priorities.
A release from the State Board of Education explains the legal basis for the divestment and how BlackRock ran afoul of Texas code:
Today, PSF 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.
The PSF’s relationship with BlackRock was not in compliance with Texas Government Code Section 809, commonly referred to as Senate Bill 13, which prohibits state investment in companies like Blackrock that boycott energy companies.
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.
Today represents a major step forward for the Texas PSF and our state as a whole. The PSF will not stand idle as our financial future is attacked by Wall Street. This bold action helps ensure our PSF remains in fact permanent and will continue to support bright futures and opportunities for generations of Texas students.
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Kinsey's move at the Texas State Board of Education follows divestment actions from numerous other states whose financial officers and attorneys general found that ESG-focused asset managers were using state funds in a manner that contradicted their states' interests and economic activity.
As Townhall has previously reported, Arizona, Missouri, and Florida are among the states that have also taken action to divest state funds from BlackRock.
"Today’s bold step by Aaron Kinsey and the Permanent School Fund of Texas, in accordance with state law, is a massive blow against the scam of ESG," emphasized Derek Kreifels, the CEO of the State Financial Officers Foundation, in a statement to Townhall. "This is what happens when public fiduciaries stand up for those to whom they owe a duty, instead of bowing down to Wall Street’s asset managers who continue to abuse their position in the market to advance radical ideologies. No matter whether it’s called 'stakeholder capitalism' or 'transition investing,' if the intent of an asset manager is to end America's oil and gas industry then they can expect continued pushback from conscientious public officials looking out for their constituents," Kreifels pledged.
As Kreifels noted, ESG policies are used as an end-run around Americans' elected representatives to force changes that mirror President Biden and Democrats' attempts to implement (read: force) an energy "transition" as part of the president's pledge to "end" fossil fuels.
"Under Larry Fink's leadership, BlackRock has been misusing client funds to push a political agenda for years," reminded Will Hild, the executive director of Consumers' Research. "Nowhere was that more egregious than in Texas, where BlackRock was simultaneously trying to destroy the domestic oil and gas industry while managing funds that depended on royalties derived from that very same industry," he emphasized. "A more flagrant violation of fiduciary duty is difficult to imagine. By divesting $8 billion from BlackRock, Chairman Kinsey and the Permanent School Fund are not only fulfilling their role as fiduciaries to one of the largest education funds in the country but sending a clear message to Wall Street elites that people can no longer be bullied into complying with ESG's destructive ideology," Hild observed. "I look forward to seeing many more states follow suit."
Both Kreifels and Hild have been leading the charge to raise awareness of the adverse impacts of ESG-driven financial management and are to credit for multiple Wall Street leaders seeking to distance themselves from the term "ESG" even as they continue to advance its principles. In a recent SEC filing covered by Townhall, BlackRock said that states and leaders — such as Texas and Kinsey — taking action to prohibit state agencies from doing business with entities boycotting certain industries "adversely impact BlackRock's business."
Still, BlackRock told other outlets on Tuesday that it "is helping millions of Texans invest and save for retirement" and pointed to investments in "Texas-based companies, infrastructure and municipalities, including $125 billion invested in the energy sector."
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