BlackRock, the world’s largest asset manager, expressed dismay over the Texas Permanent School Fund’s (PSF) decision to withdraw $8.5 billion in assets, urging administrators to reconsider. The move, prompted by a 2021 state law restricting business with financial firms linked to energy company boycotts, has sparked a broader conflict between Republican officials and Wall Street over environmental, social, and governance (ESG) considerations in investing. BlackRock Vice Chairman Mark McCombe defended the firm’s record, highlighting its significant contributions to the PSF since 2006 and rejecting allegations of discrimination against oil and gas firms.
In response, PSF Chair Aaron Kinsey cited fiduciary responsibilities to the energy-producing state, while BlackRock contended that divestment was not mandated by state law due to the funds’ consistent outperformance. Despite BlackRock’s assertion, the PSF moved forward with terminating contracts for managing investments, signaling a significant rift between the asset manager and the state. With BlackRock managing $320 billion in energy investments globally and actively engaging in Texas’ power infrastructure initiatives, the conflict underscores the complex interplay between investment strategies and political mandates in the energy-rich state.