Earlier this year, Texas Lt. Gov. Dan Patrick asked the Texas Comptroller’s Office to add financial behemoth BlackRock to the official list of companies boycotting energy companies in Texas under recent legislation, Senate Bill 13, meant to prevent state funds from being invested in companies that boycott Texas’ primary industries, oil and gas.
Patrick’s request could mean that state contracts with BlackRock are over, and BlackRock was one of many companies warned of possible contract severance last month. The Comptroller's Office says the request is part of a “long-term concern.”
“We are currently working to establish suitable candidates for the divestment list related to SB 13,” the Comptroller’s office said in a statement to Austin Journal. “We have been tasked with examining an extremely large universe of financial companies, and it would not be appropriate to comment on a single firm prior to releasing the full initial list of companies subject to the divestment provisions in SB 13.”
Last year during Texas' 87th Legislative Session, the Texas Legislature passed SB 13, also known as the Oil and Gas Investment Protection Act (SB13), which prohibits state entities such as pensions from investing in financial companies boycotting energy companies, Austin Journal previously reported. More specifically, the law requires the Comptroller of Public Accounts to maintain a list of companies which refuse to do business with or penalize energy companies because they do not pledge to meet regulatory standards beyond applicable state and federal law.
Subsequently, letters are sent to the companies listed alerting them that the state of Texas will divest from their company or fund should they continue their boycott of energy companies. Last month, Texas Comptroller Glenn Hegar warned 19 financial firms that they may lose their contracts with the state if they continue to divest from fossil fuels. The Austin Journal reported that 19 companies to receive letters from Hegar are Abrdn, PLC; BlackRock; BNP Paribas; Credit Suisse Group AG; Danske Bank A/S; HSBC Holdings PLC; Invesco, Ltd.; JPMorgan Chase & Co.; Jupiter Fund Management, PLC; Man Group, PLC; NatWest Group, PLC; Nordea Bank Abp; Rathbones Group, PLC; Schroders, PLC; Sumitomo Mitsui Trust Holdings, Inc.; Svenska Handelsbanken AB; Swedbank AB; UBS Group AG and Wells Fargo & Co.
“Our research thus far shows that some companies are telling us and other energy-producing states one thing, and then turning around and telling their liberal clients in other states another thing,” Hegar said in a March 16 press release. “On one hand, they push net-zero and other environmental, social and governance (ESG) policies and use their influence and the dollars under their management to limit access to capital for Texas oil and gas firms. Then these same firms tell Texas and other energy states that they’re committed to the fossil fuel sector.”
The 60-day timeline for them to respond is upcoming.
In his letter, Patrick cited several instances where he believes BlackRock Chairman and CEO Larry Fink has directly discriminated against the oil and gas industry.
"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,” Patrick wrote.
Earlier this year, BlackRock Chairman and CEO Larry Fink communicated in a letter that while BlackRock is highly focused on a net zero goal, "[d]ivesting from entire sectors – or simply passing carbon-intensive assets from public markets to private markets – will not get the world to net zero." Fink went on to say that "BlackRock does not pursue divestment from oil and gas companies as a policy."
In a Jan. 28 response to Lt. Gov. Patrick, the comptroller stated that BlackRock’s letter “is inconsistent with our unwavering support of the Texas oil and gas industry.”
Hegar’s office added that the concern with the divestment list is with the increased promotion of the environmental, social and governance (ESG) investment trend. ESG investing is another non-financial layer of analysis increasingly adopted by companies to identify risks and opportunities.
“As [Hegar] has noted when discussing other similar efforts including divestment lists related to companies boycotting Israel or doing business with Iran, the agency is focused on creating a transparent and defendable process that not only reliably identifies current suitable candidate companies, but also creates a framework for highlighting potential future candidates,” the comptroller’s office statement said.
The office added that contracting provisions outlined in SB 13 are currently in place; those provisions require any company entering into a contract with the state to attest that they do not boycott the fossil fuel industry and prohibit any contract with a company that cannot make that attestation.
“Comptroller Hegar is committed to safeguarding the Texas economy and Texas jobs,” the statement said. “Texas lawmakers could have singled out one company, but they understood that approach would not have the impact needed to address this alarming trend.”