UPDATE 2-BlackRock urges Texas fund managers to reconsider after $8.5 billion divestment

Isla Binnie
2 min read
2
In this article:

(Updates headline)

By Isla Binnie

NEW YORK, March 21 (Reuters) - A senior BlackRock executive said on Thursday the world's largest asset manager was "dismayed" by a Texas state fund's move to pull $8.5 billion in assets, and urged the fund's administrators to reconsider.

Texas State Board of Education Chair Aaron Kinsey said on Tuesday the Texas Permanent School Fund (PSF) was terminating a contract with BlackRock, covering around 15% of its assets, to comply with a 2021 state law that curbed agencies' business with financial firms accused of boycotting energy companies.

It was the latest broadside in a tussle between Republican state and federal officials and Wall Street firms over using environmental, social and governance (ESG) factors in investing.

BlackRock Vice Chairman Mark McCombe wrote to Kinsey on Thursday that the firm had generated $250 million for PSF since 2006 and repeated previous rejections of the allegation it discriminates against oil and gas firms.

"We urge you to reconsider your decision and prioritize Texas schools and families who have benefited from BlackRock's consistent, long-term investment out-performance," McCombe wrote in the letter.

Kinsey said he made the move to fulfil his duty to manage money for the energy-producing state.

BlackRock said state law did not require the divestment because the funds' outperformance showed "divestment would not be in the best interest of Texas PSF".

Letters sent by PSF to BlackRock, dated March 19 and seen by Reuters, requested termination of contracts to manage investments in international equities and one specific fund, without giving a reason.

BlackRock had $10 trillion of assets under management at the end of 2023. McCombe said it had $320 billion in energy investments globally, and $120 billion in Texas-based public energy companies.

Just last month, Chief Executive Larry Fink appeared with Texas Lieutenant Governor Dan Patrick at an event in Houston aimed at stoking investment in the state's power infrastructure. (Reporting by Isla Binnie; Editing by Franklin Paul and Daniel Wallis)

Advertisement

Recommended Stories

  • Biden Administration Shelves Plan to Ban Menthol Cigarettes

    The White House is reversing course after weighing the health benefits of the ban against the political risk of angering Black voters.

  • Warren Flags Crypto Ties to Child Sexual Abuse in Letter to DOJ, Homeland Security

    Leading crypto critic U.S. Sen. Elizabeth Warren (D-Mass.) has asked U.S. Attorney General Merrick Garland what tools the federal government needs to crack down on the use of digital assets to perpetrate child sexual exploitation, according to a letter she sent to the top U.S. law-enforcement official.

  • A California bill aiming to ban confidentiality agreements when negotiating legislation fails

    A bill that sought to ban the use of confidentiality agreements when negotiating potential laws in California has failed to pass a state legislative committee. The proposal by Republican Assemblymember Vince Fong failed to get enough votes to pass out of the Assembly Elections Committee on Thursday. The legislation was inspired by last year's negotiations over a bill that mandated a $20 minimum wage for fast-food workers.

  • Key House Republican Would Back Stablecoin-Marijuana Combo Bill

    (Bloomberg) -- Representative French Hill, a senior Republican on the Financial Services Committee, said he would support combination legislation tying marijuana banking to stablecoin regulation if negotiators can reach a deal.Most Read from BloombergPlunging Home Prices, Fleeing Companies: Austin’s Glow Is FadingJavier Milei Fuels Wild Rally That Makes Peso No. 1 in WorldThe Long, Slow Death of Urban NightlifeApple Intensifies Talks With OpenAI for iPhone Generative AI FeaturesFed’s Preferred C

  • Samourai Wallet Charges Raise Existential Questions for Privacy Tech

    Co-founders Keonne Rodriguez and William Lonergan Hill are charged with money laundering related to the privacy-protecting wallet.

  • 140,000 people did their taxes with the free IRS direct file pilot. But program's future is unclear

    The IRS said Friday that more than 140,000 taxpayers filed their taxes through its new direct file pilot program and participants saved roughly $5.6 million in fees they would have otherwise spent with commercial tax preparation companies. The government pilot program, rolled out this tax season in 12 states, allows people with very simple W-2s to calculate and submit their returns directly to the IRS for free. “We will take time to analyze the data and collect feedback from a wide variety of stakeholders before making a decision about direct file's future,” IRS Commissioner Daniel Werfel said on a call with reporters.

  • Crypto Firm Sues SEC to Fend Off Oversight of Ethereum

    (Bloomberg) -- Crypto software firm Consensys sued the US Securities and Exchange Commission in an effort to fend off regulation of the Ethereum blockchain and push back against what it called the agency’s “campaign to seize control over the future of cryptocurrency.”Most Read from BloombergJavier Milei Fuels Wild Rally That Makes Peso No. 1 in WorldUS Economy Slows and Inflation Jumps, Damping Soft-Landing HopesHuawei’s New Phone Runs Latest Version of Made-in-China ChipAlphabet Beats Revenue E

  • Biden has a favorite stop when he hits the road: Chipmaking plants

    Visiting chipmakers has become one of President Biden's most common reasons for getting on the road. He will do so again Thursday as he travels to Syracuse to award Micron $6 billion in federal money.

  • Some Americans filed free with IRS Direct File pilot in 2024, but not everyone's a fan

    IRS says more than 140,000 Americans filed their taxes free using its Direct File pilot but industry critics say the program's unnecessary and costly.

  • A Brief History of the Fed’s Uneasy Peace With the White House

    The Federal Reserve was anxious. For years after the end of World War II, the central bank had maintained its wartime policy of holding interest rates of U.S. debt at low levels. The Fed felt it was time to end its low-rate policy.