Texas Schools To Pull $8.5 Billion Contract From Blackrock

The Texas Permanent School Fund (PSF) opted to divest $8.5 billion from Blackrock Inc., a trillion-dollar asset management firm, after the state determined that the firm is engaged in a boycott of energy companies.

Texas State Board of Education Chairman Aaron Kinsey told Fox Business that the PSF delivered a notice to Blackrock on Tuesday, advising the New York City-based firm of the change.

“The Texas Permanent School Fund has a fiduciary duty to protect Texas schools by safeguarding and growing the approximately $1 billion in annual oil and gas royalties managed by the Texas General Land Office,” Kinsey said. “Terminating BlackRock’s contract ensures PSF’s full compliance with Texas law.”

The PSF was created in the 19th century to support Texas public schools, and the $8.5 billion divestment represents a large share of the $53 billion total that the Texas PSF controls.

Blackrock’s involvement in the ESG movement was cited as the primary reason for the divestment. According to Forbes, “ESG stands for environment, social and governance. ESG investors aim to buy the shares of companies that have demonstrated a willingness to improve their performance in these three areas.”

“BlackRock’s dominant and persistent leadership in the ESG movement immeasurably damages our state’s oil & gas economy and the very companies that generate revenues for our PSF. Texas and the PSF have worked hard to grow this fund to build Texas’ schools,” Kinsey said.

Blackrock has endured similar divestments from other Republican-led states, but Texas represents the largest to date.

Blackrock has pared back some support for ESG proposals, acknowledging that support of those proposals has hurt their bottom line. The company also pushed back against the Texas divestment stating that it was politically motivated and trying to focus on Blackrock’s history of investing in Texas-based companies.

“BlackRock is helping millions of Texans invest and save for retirement,” a BlackRock spokesperson said. “On behalf of our clients, we’ve invested more than $300 billion in Texas-based companies, infrastructure and municipalities, including $125 billion invested in the energy sector.”

According to The Hill, the fossil fuel industry in Texas contributed around $26 billion in state and local taxes, and that about $1.8 billion of that went into the PSF fund.