Title: Texas to Pull $8.5 Billion Investments from BlackRock Over ESG Policies

In a move that signifies the largest divestment from a financial firm due to Environmental, Social, and Governance (ESG) policies, Texas has announced that it will withdraw approximately $8.5 billion in investments from BlackRock. This decision comes as a growing number of Republican-led states have started severing ties with companies that they believe prioritize liberal objectives.

The Chairman of the Texas State Board of Education, Aaron Kinsey, proclaimed the divestment on Tuesday and promptly notified BlackRock through a letter. The motive behind this action was to comply with Texas' anti-ESG law, which prohibits state investments in companies like BlackRock that Republicans argue boycott the energy sector.

Kinsey expressed concerns regarding BlackRock's influential role in the ESG movement, citing significant damage to Texas' oil and gas economy and the companies responsible for financing educational initiatives through the state's Permanent School Fund (PSF). He emphasized the tireless efforts made to expand the PSF and construct schools throughout Texas.

Highlighting their commitment to the state, BlackRock contested the decision, underscoring their investments in Texas-based companies, infrastructure, and municipalities. The company claimed to have invested over $300 billion, including $125 billion in the energy sector and $550 million in a joint venture with Occidental. BlackRock also highlighted their recent energy summit in Houston, aimed at improving Texas' power grid.

ESG is a financial concept that goes beyond maximizing profits and takes into account social and environmental aspects when making investment decisions. However, in recent years, there has been a Republican opposition to ESG and what they describe as "woke" corporate practices. BlackRock has specifically become a target for Republican state attorneys general and state treasurers.

Derek Kreifels, CEO of the State Financial Officers Foundation, remarked on the issue, stating that public officials concerned about their constituents will continue to push back if asset managers aim to dismantle America's oil and gas industry under the guise of stakeholder capitalism or transition investing.

BlackRock's CEO, Larry Fink, has become a prominent figure in advocating for ESG. In his annual letter in 2020, Fink emphasized the importance of addressing climate change as a "defining factor" in assessing companies. BlackRock argues that they merely request companies to disclose material issues, such as climate change risks, so that investors can make informed financial decisions.

The Texas law that triggered this divestment was passed in 2021, alongside another measure focusing on the firearms industry. Proponents argue that these laws safeguard the state's energy industry, while critics believe they impede economic activity in Texas. A recent study conducted on behalf of the Texas Association of Business and Chamber of Commerce Foundation estimated a substantial loss of economic activity in the state due to these laws.

Texas joins a list of GOP-led states, including South Carolina, Utah, Arkansas, Missouri, and Louisiana, who have already divested or announced plans to divest hundreds of millions of dollars from BlackRock and its CEO, Larry Fink. Prior to Texas' announcement, Florida's chief financial officer announced a $2 billion divestment from BlackRock in 2022, which was the largest state divestment from BlackRock until now.