BlackRock Chairman and CEO Larry Fink. BlackRock made Texas Comptroller Glenn Hegar’s list of oil industry boycotters, but other big financial companies, such as JPMorgan Chase did not.
Lt. Gov. Dan Patrick, right, listens as Larry Fink, chairman and CEO of BlackRock, makes a statement during opening remarks of the Texas Power Grid Investment Summit on Feb. 6 in Houston.
The State Board of Education is putting the oil and gas industry ahead of Texas schoolchildren, hobbling the public school trust fund and damaging the climate.
The Republican leader of the State Board of Education made headlines last week when he declared the Permanent School Fund would pull $8.5 billion out of BlackRock, the world’s largest investment firm.
“BlackRock’s destructive approach toward the energy companies that this state and our world depend on is incompatible with our fiduciary duty to Texas,” Chair Aaron Kinsey wrote on social media last week.
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While that turned out to be essentially political posturing, as my colleague Edward McKinley reported, Kinsey’s co-opting a financial decision for political gain reveals a higher truth about growing authoritarianism in Texas. Any company or individual who contradicts the Republican regime’s orthodoxy will pay an economic price.
Republican elected officials across the nation are following Texas’s lead in boycotting companies for pursuing profit.
You can end up on Texas’s blocklist if you’ve ever refused to do business with Israel because of how the government treats Palestinians, declined to invest in a gun manufacturer because of school shootings, or bought a stock fund that avoids investing in fossil fuels.
Whether you are a pipefitter working at a sewage treatment plant or one of the world’s biggest banks, you must legally declare that you can pass the state’s official political litmus test. Expect lawsuits if the Texas attorney general or comptroller determines you didn’t.
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Kinsey’s self-aggrandizing at BlackRock’s expense is the latest indignity for one of the world’s best-performing financial institutions. Lt. Gov. Dan Patrick, Attorney General Ken Paxton and Railroad Commissioner Wayne Christian have already made political hay out of CEO Larry Fink’s thoughtful observation that savvy investors must consider climate change in their calculations.
BlackRock Vice Chairman Mark McCombe responded to Kinsey’s announcement with a scathing letter, reminding Texans that the firm has $320 billion invested in oil and gas, outperformed industry benchmarks and earned Texans an extra $250 million.
“Your actions put short-term politics over your long-term fiduciary responsibilities. We urge you to reconsider your decision and prioritize Texas schools and families who have benefited from BlackRock’s consistent, long-term investment outperformance,” the letter said.
McCombe also suggested Kinsey played fast and loose with the rules while engineering this political stunt, which was not required by law. The Legislature exempted the permanent school fund from the boycott laws.
“We learned of your decision to end Texas PSF and BlackRock’s 18-year relationship through a press release,” he added. “We’ve come to learn that not all Texas PSF board members were made aware of your decision before it was announced and did not have an opportunity to ask questions or share views.”
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The Texas Association of Business Chambers of Commerce Foundation, not exactly a bunch of left wing radicals, warned that the Texas ban on investing with BlackRock and 10 other major global financial institutions was hurting the state’s economy and reputation.
“Certain laws can have a negative impact on businesses and place additional, unnecessary burdens on our state’s taxpayers,” Executive Director Stephanie Matthews said in a statement. “It is important for our state’s policymakers to understand the implications of these laws in order to ensure Texas remains the top U.S. state for business.”
The study found that boycott laws will cost Texas $668.7 million lost in economic activity, $180.7 million in decreased annual earnings, 3,034 fewer full-time, permanent jobs, and $37.1 million in state and local tax revenue losses.
Last month, I wrote a series of columns about how the state’s boycotts could cost Texas taxpayers $22 billion in higher interest payments on government bonds alone. I also demonstrated how Republican leaders unjustly punished these companies for their public statements, not their actions, since they invest billions in oil and gas.
Last year was the hottest since humans began keeping track, and 2024 is on pace to break records again. The number and severity of natural disasters is growing, and people around the world understand that burning fossil fuels is the cause of their suffering.
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Any investor who thinks the world’s largest oil and gas companies will produce all of the reserves in their inventories is delusional. We will always need petroleum products, but we will need a lot less.
Gov. Greg Abbott, Patrick and other Republican leaders are using state power to punish people who recognize this truth and invest accordingly. If that’s not an authoritarian abuse of power, I don’t know what is.
Award-winning opinion writer Chris Tomlinson writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at houstonhchronicle.com/tomlinsonnewsletter or expressnews.com/tomlinsonnewsletter.
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