A senior BlackRock Inc (NYSE: BLK) executive recently expressed dismay over the Texas Permanent School Fund‘s (PSF) decision to pull $8.5 billion in assets from the investment management firm. BlackRock Vice Chairman Mark McCombe wrote a letter urging the fund’s administrators to reverse course on terminating the contract.
The move by the PSF stems from a 2021 Texas law, the Fair Access Act, which restricts state agencies from working with financial firms alleged to be boycotting energy companies. It represents the latest clash between Republican officials and Wall Street over environmental, social and governance (ESG) investing factors.
In his letter to Texas State Board of Education Chair Aaron Kinsey, McCombe highlighted BlackRock’s strong performance managing PSF assets since 2006, generating $250 million in returns. He reiterated BlackRock’s denial of discriminating against oil and gas firms.
“We were dismayed by your announcement to terminate BlackRock’s management of approximately $8.5 billion of Texas Permanent School Fund assets,” McCombe wrote. “Your actions put short-term politics over your long-term fiduciary responsibilities. We urge you to reconsider your decision and prioritize Texas schools and families who have benefited from BlackRock’s consistent, long-term investment outperformance.”
Kinsey previously defended the divestment decision as fulfilling his duty to an energy-producing state like Texas. However, BlackRock contends the state law does not require divestment since the firm’s outperformance shows it is in PSF’s best interest.
“The notion that we discriminate against oil and gas is simply false based on the investments we make on behalf of our clients,” McCombe told Kinsey.
“BlackRock holds more than $320 billion in global energy investments, including approximately $120 billion in Texas-based, publicly traded energy companies. We are also significant investors in private energy infrastructure throughout Texas.”
With $10 trillion in assets under management globally, BlackRock says it has $320 billion invested in energy, including $120 billion in Texas public energy companies. Early in February, BlackRock CEO Larry Fink joined Texas Lt. Governor Dan Patrick to promote investments in the state’s power infrastructure.
Information for this story was found via Reuters, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
