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Texas banned 10 financial firms from doing business with the state after Comptroller Glenn Hager said Wednesday that it does not support the oil and gas industry.
Hager, a Republican running for re-election in November, banned BlackRock Inc., and other banks and investment firms — as well as some investment funds within big banks such as Goldman Sachs and JPMorgan — from entering into most contracts with state and local governments. Hager’s office said the companies have “boycotted” the fossil fuel sector.
Hager sent an inquiry to hundreds of financial firms earlier this year, requesting information on whether they were avoiding investing in the oil and gas industry in favor of renewable energy companies. The survey is the result of a new Texas law that went into effect in September and prohibits most state agencies as well as local governments from contracting with firms that cut ties with carbon-emitting energy companies.
State pension funds and local governments that issue municipal bonds must divest from the companies on the list, though there are some exemptions, Hager said.
“The Environmental, Social and Corporate Governance (ESG) movement has produced an opaque and distorted system in which some financial companies no longer make decisions in the interests of their shareholders or their clients, but instead use their financial influence to push social and political agendas. ,” Hager said in a written statement Wednesday.
New York-based BlackRock, which has publicly acknowledged investing more in renewable energy, criticized Hager’s decision.
“This is not a fact-based decision,” a company spokesperson said in a written statement. “BlackRock does not boycott fossil fuels – more than $100 billion invested in Texas energy companies on behalf of our clients proves this.
“Elected and appointed public officials have a duty to act in the interest of the people they serve,” the spokesperson added. “The politicization of state pension funds, restricting access to investments, and affecting the financial returns of retirees, is not consistent with that duty.”
The other nine companies banned outright are: BNP Paribas SA, a French international banking group; Swiss-based 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, a fund management group; 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.
Funds within large companies aim to make sustainable investments, such as Goldman Sachs’ “Paris-Aligned Climate US Large Cap Equity ETF” and JP Morgan’s “US Sustainable Leaders Fund”.
Texas energy experts said the intent of the law, and Wednesday’s announcement, was to punish financial firms unwilling to invest in the backbone of the Texas economy — oil and gas.
“But at the end of the day, it’s all about the rate of return,” said Ed Hirsch, an energy economist at the University of Houston. “Quite frankly, fossil fuel companies, especially oil and gas companies, have not been the best performers in (the stock market) this year.”
The Lone Star chapter of the environmental group Sierra Club said Hager’s “climate denial publicity stunt will be costly to taxpayers.”
“The major financial institutions on this list are beginning to recognize that investing in fossil fuels poses significant risks in the face of an inevitable clean energy transition, and that addressing the financial risks of the climate crisis is essential to good business,” said Ben Cushing, Sierra Club Fossil-Free Finance Campaign Manager. . “The fact that the Texas Comptroller has arbitrarily selected a handful of companies that, despite their climate commitments, continue to make large fossil fuel investments is nothing more than a political stunt at the expense of Texas taxpayers.”
James Coleman, an energy law professor at Southern Methodist University, said there is political pressure on both sides of the debate.
“Not only from those who hope to reign in fossil fuels, but also from those who are concerned that moving away from fossil fuels is an economic loss,” Coleman said.
But Coleman said that “when a state limits the potential world it can trade in, it potentially leaves some returns on the table.”
The actual impact on Texas taxpayers is difficult to predict, said Felix Morman, a Texas A&M University School of Law professor who studies energy and climate change. He called Wednesday’s move “a symbolic act by the regulator to oppose the growth of ESG investments”.
“Will this announcement boost Texas oil and gas companies? Morally, maybe,” Mormont wrote in an email to the Texas Tribune. “But, economically, Chevron, ExxonMobil, and other Texas oil-and-gas majors play in a global league… In other words, I strongly doubt the comptroller is going to shut down another oil-and-gas boom in Texas.”
As the political campaign heats up ahead of the November election, Hager this week accused Harris County of cutting spending on its constables’ offices, even though those offices would get a big boost in their budgets under the proposed budget. Republicans used Hager’s allegations as an opportunity to criticize County Judge Lina Hidalgo, the county’s Democratic chief executive, who is seen as a rising star in the party as she faces a re-election battle in November.
Last week, Hager announced that he supports Texas repealing state taxes on menstrual products such as tampons and sanitary pads, a position echoed by Gov. Greg Abbott.
Disclosure: Exxon Mobil Corporation, Southern Methodist University, Texas A&M University, Texas A&M University School of Law and the University of Houston are financial supporters of the Texas Tribune, a nonprofit, nonpartisan news organization funded in part by member donations, the Foundation and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find their full list here.
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