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Written by Ira Binney
NEW YORK (Reuters) – Texas’ school foundation on Tuesday accused BlackRock of the investment giant’s boycott of fossil fuel energy producers that make up the bulk of the state’s industry, accusing the state of giving up about $8.5 billion. It announced that it would terminate its contract to manage the funds.
BlackRock has denied any involvement in the boycott and said the funds withdrawn represent only a fraction of the $10 trillion in assets it manages.
But the Texas Permanent School Fund move comes as BlackRock and other asset managers continue to stir controversy in some Republican-run states over their environmental, social, and corporate governance (ESG) investments. is highlighted.
Aaron Kinsey, chairman of the Texas Board of Education, which administers the fund, said the relationship with BlackRock violates state law that prohibits investing in companies accused of boycotting energy companies. .
Kinsey told Reuters the fund complies with a 2021 Texas law that requires state agencies to divest from fund managers like BlackRock that cut investments to reduce greenhouse gas emissions.
The foundation added that it receives about $1 billion a year from the Texas General Land Office, which manages 13 million acres worth of land and mineral rights.
“That money comes primarily from the oil and gas industry…If you don’t have oil and gas revenue, if you don’t have $1 billion a year, that’s a problem for our fund and obviously a long-term, existential issue. “It’s a risk,” he said.
The school fund’s portfolio still has some illiquid investments in BlackRock, but these will fade over time, Kinsey added.
BlackRock called the move arbitrary and said it ignored the private equity firm’s $120 billion investment in the Texas public energy company. “This decision puts at risk Texas schools and families who have benefited from BlackRock’s consistent long-term performance,” BlackRock said in a statement.
CEO Larry Fink said BlackRock lost about $4 billion last year as a result of the political backlash, but the losses dwarfed the net inflows into BlackRock. said.
Fink has since said he would stop using the term “ESG” and hosted a summit with state officials in Houston last month focused on investing in the state’s infrastructure.
(Reporting by Ira Binney in New York; Editing by Matthew Lewis and Aurora Ellis)
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