BlackRock, European firms face Texas pension ban over energy policy

In a document his office released Wednesday, Hegar also flagged nearly 350 individual funds that he determined violated the law, although many investment firms dispute this.

Hegar was required to compile the list under the law passed last year to protect Texas’ large oil and gas sectors. Under the law, government agencies must stop doing business with the listed companies or explain continuing relationships, for example, if they decide a sale would conflict with their fiduciary duty.

Funds such as the $200 billion Teacher Retirement System, Texas’ largest public pension fund, now have 30 days to report what money they have with the publicly traded financial companies.

Wall Street has watched the list’s release as a bellwether for how aggressively Republican state officials like Hegar will pursue a growing campaign against corporate policies on environmental, social and governance issues they say hurt legitimate industries.

Investors have continued to put money into ESG-oriented funds despite choppy markets this year.

Other financial firms Hegar is listed on include Credit Suisse Group, BNP Paribas SA, UBS Group AG and Schroders PLC.

Each of the companies was thoroughly scrutinized on criteria such as the pledges they had made to investor groups aiming to reduce emissions such as Climate Action 100+ or ​​whether they had set aggressive emissions reduction targets for portfolio companies, Hegar said in an interview.

The 10 publicly traded companies are “boycotting the oil and gas industry according to the research and the documentation we’ve found. It’s that simple,” Hegar said.

While BlackRock and the European firms have expressed concern about issues such as climate change and how it could affect portfolio companies’ financial performance, they continue to hold fossil fuel stocks and had previously argued that their ESG concerns were shared by clients.

Black stone (BLK) is the world’s largest money manager with about $8.5 trillion in total assets, including about $20 billion it manages for public funds in Texas. It has become a frequent target of critics on the right, but also of climate activists who say it does too little to cut global emissions and who have chosen their headquarters in New York.

“Elected and appointed public officials have a duty to act in the best interest of the people they serve,” BlackRock said in a statement. “Politicizing state pension funds, limiting access to investments and affecting the financial returns of pensioners is not compatible with that duty.”

Notably, Hegar’s list does not include major US companies including JPMorgan Chase & Co or Wells Fargo & Co. Most top US and European investors had lobbied hard to be excluded.

One JPMorgan fund was included in the list, as were those from major US index fund providers Vanguard Group and State Street Corp.

A JPMorgan spokeswoman said the bank looks forward to doing business with public utilities in Texas. Wells Fargo declined to comment. State Street, BNP and Schroders did not immediately comment.

Vanguard, which had just five ESG-focused funds on Hegar’s list, said it “does not boycott entire industries or sectors of the economy, and our focus on maximizing shareholder value remains unchanged.”

UBS objects to being included on the list, a spokesperson said. “We provided their office with extensive information about our policies and practices, demonstrating that UBS does not boycott utilities even under a broad interpretation of Texas law.”

Credit Suisse “is not boycotting the energy sector as the bank has ongoing partnerships and strong client relationships in the energy sector,” a spokesperson said. “We look forward to working with the Texas Comptroller to resolve this matter.”

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