Texas Teachers’ Pension Fund split from investment firms accused of oil and gas ‘boycott’

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The Texas Teachers’ Retirement System has stripped part of its massive pension fund from 10 financial firms that the state comptroller set aside for “boycotting” the oil and gas industry.

In 2021, Texas lawmakers banned public funds from contracting or investing in companies that exit oil, gas, and coal companies. In August, Comptroller Glenn Hegar released a list of 10 investment companies and several funds that would be barred from doing business with the government because of their climate change-focused investment strategies.

Financial firms have in recent years increased their commitment to environmental, social and governance (or ESG) strategies that attempt to explain the negative social costs of investing in companies that exacerbate climate change, exploit labor practices or engage in corporate corruption.

In December, Brian Guthrie, chief executive of the Teachers’ Retirement System, wrote to state officials confirming that the fund had complied with the law by selling its shares in these companies, including influential institutional investor BlackRock Inc.

“TRS does not own any shares directly in financial companies that the controller believes are boycotting energy companies,” Guthrie wrote in a letter first released by Bloomberg Law to Speaker of the Texas House of Representatives Dade Phelan, Lieutenant Governor Dan Patrick and the Attorney General. Ken Paxton, December 31st.

Rob Maxwell, a spokesman for TRS, declined to comment on the total value of assets withdrawn from the fund.

Nearly 2 million Texas educators and retirees participate in the Teachers’ Retirement Fund, which is valued at approximately $173 billion. It is the sixth largest such pension fund in the US, according to Pensions & Investments magazine, which conducts an annual analysis.

Other public funds subject to the act include the $56 billion Texas Permanent Schools Fund, the largest such K-12 fund in the US; $33.2 billion Texas State Pension System; and the $35 billion Texas Municipal Pension System.

The law allowed each of the funds to request an exemption if the disposal would reduce the value of the fund. The teachers’ pension system did not require an exemption.

A September letter from the Texas Municipal Retirement System to Hegar obtained by The Texas Tribune said the fund does not hold securities in the listed companies. The Permanent School Fund did not immediately respond to a request for comment.

In 2020, BlackRock caught the world’s attention when its CEO called on other corporate leaders to reduce climate change-related greenhouse gas emissions from their companies. powerful oil and gas industry of the state.

During a 2022 hearing, Dahlia Blass, senior managing director and head of external relations for BlackRock’s global executive committee, told Texas lawmakers that BlackRock’s environmental initiatives have not prevented the firm from investing in oil and gas. BlackRock invested about $107 billion in Texas energy companies in the most recent quarter, Blass said.

Some investment firms have adopted ESG strategies that evaluate companies based on whether they contribute to solving social issues such as climate change, and some have also created dedicated investment funds designed for clients who want to invest in funds that meet certain criteria. ESG.

According to a report by the US SIF, an industry group representing institutional investors with investments in sustainability, ESG assets in the US accounted for about 13% of total professionally managed assets last year, worth about $8.4 trillion.

10 firms that Texas intends to sell: BlackRock Inc.; BNP Paribas SA, French international banking group; Swiss companies Credit Suisse Group AG and UBS Group AG; Danske Bank A/S, a Danish multinational banking and financial services corporation; London-based Jupiter Fund Management PLC; Nordea Bank ABP, a European financial services group based in Finland; Schroders PLC, a British multinational asset management company; and the Swedish banks Svenska Handelsbanken AB and Swedbank AB. The Controller has also identified specific ESG-focused funds that are run by larger companies for sale.

Disclosure: Texas Comptroller of Public Accounts was a financial supporter of The Texas Tribune, a non-profit, non-partisan news organization funded in part by donations from members, foundations, and corporate sponsors. Financial sponsors play no role in Tribune journalism. Find their complete list here.