The State of Texas’ various pension systems completed their accounting of investments in the 10 companies tagged as “fossil fuel boycotters” by the Texas Comptroller in accordance with Senate Bill (SB) 13.
At the deadline on September 23, the two largest pension systems — the Teacher Retirement System (TRS) and the Employee Retirement System (ERS) — disclosed direct or indirect holdings in 10 out of 10 on the list.
That list consists of:
- BNP Paribas
- Credit Suisse Group
- Danske Bank
- Jupiter Fund Management
- Nordea Bank
- Schroders PLC
- Svenska Handelsbanken
- UBS Group
There is another list of over 300 funds deemed to spurn fossil fuel investment.
TRS represents 1.6 million members across the state with an unfunded liability of $30,074 per member, $50.6 billion in total. The pension’s amortization period, the length of time it’d take to pay off promised benefits at current funding levels, is 27 years.
The agency’s investment portfolio is updated frequently by TRS and changes are publicly available on a month-by-month basis. According to that document, TRS has $687 million of holdings in those companies at the moment, including $608 million in BlackRock.
That dollar value will fluctuate as frequently as stock prices change — which happens constantly.
BlackRock has become the face of this issue, first, because of its mammoth size and influence, and second, due to the frequent public statements by its executives on pursuing a net-zero emissions future which entails moving away from fossil fuel power.
Earlier this month, BlackRock CEO Larry Fink made such declarations at the Clinton Global Initiative annual meeting alongside the eponymous former president.
ERS has nearly 395,000 members with an unfunded liability of $37,257 per member. Its amortization period is infinite; the Texas Legislature restructured ERS to place it on a stronger fiscal footing by moving away from a defined benefit plan and to cash balance plans for new members.
As of August 24, ERS had almost $40 million in direct holdings in the 10 companies according to a chart provided to The Texan.
The Texas County & District Retirement System, which has 320,000 members, reported no direct holdings in the 10 companies but has indirect investments in each of them; the same goes for the Texas Municipal Retirement System.
These pension systems will now begin selling off their holdings and moving that capital elsewhere, which must be reported by January 5, 2023. The SB 13 list will be updated as often as quarterly, according to the comptroller, with additions and subtractions occurring as necessary.
While not a pension, the Texas Permanent School Fund (PSF) is an investing entity with a $56 billion endowment — the profits from which buttress the state’s public school finances. Collectively, the PSF had $88.5 million in holdings tied to the SB 13 list’s companies as of August 31, 2021.
A letter from the General Land Office (GLO) to the comptroller stated that the School Land Board, which oversees “a portion” of the PSF, claimed nothing under its oversight had either direct or indirect investments in those companies. However, the GLO added that the School Land Board “has several energy-related private equity fund investments with BlackRock…that are exempt from divestment.”
In response, Hegar pushed back against the judgment made by the GLO on these specific funds. “[I]t is important for state governmental entities to make their own determinations regarding the policies that underlie the statutes at issue,” he said.
“However, given the importance of these underlying policies, I believe state governmental entities should carefully examine all available options and consider alternative approaches where possible to meet their investment goals within appropriate fiduciary standards.”
Passed last year, SB 13 prohibits state pension investments from flowing to corporations deemed to be boycotting fossil fuel companies. Among the criteria the comptroller used to narrow down the offending companies was whether or not they signed onto two of the three main climate and net-zero accords: Climate Action 100+, the Climate Pledge, and the Net Zero Coalition.
The whole issue — which falls under the broader umbrella set by the Environment, Social, and Governance movement — has brought energy policy and the movement of capital to a head-on collision. The State of Texas and its GOP officials aim to safeguard the state’s pivotal oil and gas industry as many world governments, including the current U.S. regime, continue to push the envelope away from fossil fuel reliance and toward a yearned-for net-zero future.
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Brad Johnson is a senior reporter for The Texan and 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.