“As you prepare the official list of companies that boycott energy companies, I ask that you include BlackRock, and any company like them, that choose to hurt Texas oil and gas energy companies by boycotting them in violation of Senate Bill 13,” Patrick wrote to Texas Comptroller Glenn Hegar.
Senate Bill (SB) 13, by Sen. Brian Birdwell (R-Granbury), requires the comptroller to pull state funds out of any company that is deemed to have policies of divestment from oil and gas.
Back in November, Hegar signed a letter from state fiscal officers across the country threatening to pull state money from companies with those policies.
BlackRock CEO Larry Fink wrote in his 2022 “Letter to CEOs,” “The next 1,000 unicorns (market-changing companies) won’t be search engines or social media companies, they’ll be sustainable, scalable innovators — startups that help the world decarbonize and make the energy transition affordable for all consumers.”
Fink’s tone in the letter tries to thread the needle on the typical political aversion between the environmentalist movement’s green energy push and the general support for the economy’s capitalistic qualities.
“We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients,” he said.
These “sustainable” technology innovators, Fink says, are where the cash cows come to lie and thus should be a main component of BlackRock’s investment strategy. BlackRock has consistently touted support for “decarbonizing” the economy, aiming to reach “net-zero” emissions.
Back in 2020, Fink said in the same message to clients, “Where we do not see progress in [transitioning to ‘net zero’], and in particular where we see a lack of alignment combined with a lack of engagement, we will not only use our vote against management for our index portfolio-held shares, we will also flag these holdings for potential exit in our discretionary active portfolios[.]”
The main path suggested by environmentalists to reach that goal is replacing thermal energy sources like oil and gas with renewable and intermittent ones like wind and solar.
“These statements indicate that BlackRock is capriciously discriminating against the oil and gas industry by exiting investments solely because companies do not subscribe to a ‘net zero’ policy beyond what is required by law,” said Patrick.
Fink contested this notion in his letter, stating, “BlackRock does not pursue divestment from oil and gas companies as a policy. We do have some clients who choose to divest their assets while other clients reject that approach.”
As comptroller, Hegar is tasked with identifying companies in violation of SB 13 and divesting state funds from the offenders.
According to documents obtained by The Texan, as of June last year, the Teacher Retirement System (TRS), Texas’ largest public pension, had almost $2.8 billion committed to BlackRock-managed private equity funds. TRS has another $4 billion tied into long-oriented accounts with BlackRock. Additionally, TRS holds $650 million in shares of BlackRock tactical and strategic funds along with $25 million in BlackRock common stock.
Hundreds of millions of dollars are at stake based on the determination of state officials and the actions of BlackRock.
Hegar’s office is currently working on establishing a standard on which to judge these companies for anti-oil and gas practices and tallying a list of offenders. The task is not a simple one. Companies often say one thing and do another with their investments. Public statements of oil and gas divestment, or general antipathy towards that energy source, can affect markets with the very effect SB 13 was passed to prevent.
Also, part of the comptroller’s task at hand is determining how the state approaches a trading company like Vanguard, which provides oil and gas investment funds alongside renewable-focused accounts.
In response to Patrick’s letter, Hegar said in a statement to The Texan that he agrees with the lieutenant governor on the efficacy of SB 13’s directive.
“We are looking at an extremely large universe of financial institutions, and I cannot comment on any specific firm,” he stated.
“However, as my office prepares the list of companies subject to the divestment provisions in SB 13, we are carefully monitoring the public statements made by companies and their leadership. Telling the state of Texas one thing while telling coastal investors another will not shield a company from our process.”
The list, a spokesman with the comptroller’s office said, will be finalized in the coming months.
The West Virginia State Treasurer Riley Moore, who led that fiscal officer letter from November, recently pulled state treasury funds from BlackRock over its “net-zero” push and the company’s other investments in China.
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Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.