Title: Texas Terminates $8.5 Billion Investment with BlackRock over Energy Sector Boycott

In a significant move, the State of Texas has decided to terminate its massive $8.5 billion investment with trillion-dollar asset manager, BlackRock. According to Texas State Board of Education Chairman Aaron Kinsey, the state's action is based on its determination that the firm is engaged in a boycott of energy companies.

The termination of the investment, known as the Texas Permanent School Fund (PSF), was made in accordance with a 2021 state law that seeks to distance Texas from financial institutions boycotting the oil and gas sector. The 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 Kinsey stated that BlackRock's leadership in the ESG (environmental, social, and governance) movement has caused substantial damage to Texas' oil and gas economy and the companies that generate revenues for the PSF. The decision to terminate BlackRock's contract ensures the PSF's compliance with Texas law and protects the state's fiduciary duty to Texans.

This divestment represents a significant portion of the $53 billion Texas PSF, which was created in the 19th century to support the state's public schools. It is also the largest divestment of its kind since Republican-led states began severing financial ties with BlackRock and other financial institutions over their pursuit of ESG standards.

The ESG movement, which advocates for divesting from traditional energy industries and investing in green energy sectors to combat global warming, has faced resistance from the energy industry and lawmakers at both the state and federal levels. Senate Bill 13, passed in 2021, requires the Texas comptroller to list financial companies found boycotting fossil fuel companies. BlackRock and several funds managed by the firm were included in the list, leading Texas Comptroller Glenn Hegar to call for the PSF and five state pension funds to sever ties with the asset manager.

Chairman Kinsey praised the action as a significant step forward for the PSF and the state as a whole, ensuring that the fund remains permanent and continues to support future generations of Texas students. BlackRock, which manages over $10 trillion in assets, has defended itself by stating that while it factors in ESG matters, it remains invested in traditional energy companies and supports a range of investment objectives.

The termination of Texas' investment with BlackRock was applauded by Derek Kreifels, CEO of the State Financial Officers Foundation, and Will Hild, Executive Director of Consumers' Research, who have led opposition to ESG policies nationwide. They highlighted BlackRock's misuse of client funds to push a political agenda and viewed Texas' divestment as a strong message that Wall Street elites can no longer bully others into complying with ESG's ideology.

Prior to Texas' action, several other states, including Arizona, Arkansas, Florida, Louisiana, Missouri, South Carolina, Utah, and West Virginia, had also announced divestments from BlackRock and other asset managers. The largest previous divestment came from Florida, totaling $2 billion, announced by Florida Chief Financial Officer Jimmy Patronis in December 2022.

Critics of these states' divestments argue that they harm consumers. A recent study by the Texas Association of Business Chambers of Commerce Foundation estimated that Texas' "Fair Access" laws would result in a loss of $668.7 million in economic activity and 3,034 fewer full-time, permanent jobs.