Lt. Gov. Dan Patrick asked Comproller Gelnn Hegar to place BlackRock at the top of the list of financial companies that boycott the Texas oil and gas industry under Senate Bill 13.
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.
Laurence "Larry" D. Fink, chairman, chief executive officer and co-founder of BlackRock Inc., speaks during an interview in Hong Kong, China.
A monitor with Blackrock Inc. signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Tuesday, March 15, 2022.
Texas lawmakers have never hesitated to use the power of the state to punish those with whom they disagree.
Do you or your company refuse to do business with Israel? Then you cannot do business with the state of Texas. Do you boycott gunmakers? Don’t even think about applying for a state contract.
The newest boycott legislation, though, goes much further. If a financial services firm refuses to do business with coal, oil or natural gas businesses or offers products that allow investors to avoid the fossil fuel industry, then no government authority in Texas can contract its services. If a company invests in those corporations — but demands they tackle climate change — the punishment is the same.
Advertisement
Article continues below this ad
Texas’ law could cost taxpayers $22.5 billion in higher interest rates and fees over the next 30 years, a study by an economist at the Wharton School calculated. This column is part two of a three-part series on the conservative war against considering environmental, social and governance factors, known as ESG, when investing.
For years, Big Oil executives have complained about a growing movement to boycott and divest from fossil fuel companies. Proponents of ESG investing have produced research showing how public companies contributing to climate change, income inequality and corruption pay less in total shareholder returns than socially responsible companies.
Doing good and doing well are connected, they argue.
Oil and gas corporations call ESG investing discrimination, and they’ve asked state lawmakers across the country to pass anti-boycott laws like Senate Bill 13, which became Texas law on Sept. 1, 2021.
Advertisement
Article continues below this ad
Texas is arguably the first state to pass anti-ESG legislation, which first emerged from conservative think tanks after large companies began advertising themselves as “climate-friendly” in the early 2000s. Conservative groups, such as the Texas Public Policy Foundation, lobbied Republican lawmakers to pass the bill, which Democrats mostly opposed.
SB13 requires the comptroller, Texas’ elected chief financial officer, “to prepare and maintain a list of all financial companies that refuse to deal with, terminate business activities with, or otherwise take any action that is, solely or primarily, intended to penalize, inflict economic harm on, or limit commercial relations” with the fossil fuel industry.
The law created a new entity within the comptroller’s office, the Texas Treasury Safekeeping Trust Co., to implement the law. Comptroller Glenn Hegar reviewed banks’ public statements on climate change and, on March 16, 2022, sent letters to 19 firms that appeared to violate the statute.
“The Comptroller has determined you may be a financial company that boycotts energy companies,” the form letter said. “You must complete and return answers to the questions enclosed with this letter.”
Comptroller attorneys disclose little about how they determined that UBS, BlackRock and other global financial institutions landed on their list. But membership in two associations — the Climate Action 100 and the Net Zero Banking Alliance/Net Zero Asset Managers Initiative — appeared to have triggered a review.
Advertisement
Article continues below this ad
Climate Action 100 members pledge to pressure 170 of the world’s largest companies, many of them significant emitters of greenhouse gases, to change their business plans to comply with the Paris climate accord. If the world wants to limit global warming without permanently damaging life on Earth, these companies must change their ways.
The Net Zero Banking Alliance is a United Nations-backed group of global banks “committed to financing ambitious climate action to transition the real economy to net-zero greenhouse gas emissions by 2050.”
BlackRock, UBS, JPMorgan Chase and the other companies joined the groups but did not divest from fossil fuel companies. Most kept issuing bonds, buying stocks and offering investment vehicles so their clients could make money from fossil fuels.
“We do not boycott energy companies,” BlackRock, the world’s largest investment firm, said in a letter to the comptroller obtained via a public information request. “On our clients’ behalf, BlackRock currently has approximately $310 billion in assets invested in energy companies globally, including over $115 billion invested in Texas energy companies alone.”
In letters between UBS and the comptroller, high ESG ratings from the global ratings firm MSCI were also prima facie evidence against the firms. But UBS pointed out that some oil and gas companies also have high ESG ratings.
Advertisement
Article continues below this ad
“UBS AG has an MSCI ESG Rating of AA — the same ranking as Baker Hughes, ConocoPhillips, Cheniere, and Schlumberger,” a letter dated Sept. 28, 2022, observed.
BlackRock executives met with Lt. Gov. Dan Patrick, Hegar and Railroad Commissioner Wayne Christian. But the GOP politicians delighted in slamming the out-of-state bankers for so-called woke capitalism.
The problem with protecting oil and gas, though, is the high cost to Texas taxpayers. Only a few companies can handle the $50 billion in bonds that Texas governments issue yearly. Companies compete by offering lower interest rates than others. But when you take the biggest players out of the competition, the cost of those bonds goes up.
In part three of this series, I’ll examine how the financial services firms folded under pressure from Texas Republicans.
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.
Advertisement
Article continues below this ad
login
who are we?
contact us
qosheapp
Toi Staff
Gideon Levy
Belen Fernandez
Rami G Khouri
Mort Laitner
Rachel Marsden
Donald Low
Bradley Blankenship
Ali Fathollah-Nejad
Nikkei Editorial
Michael Kwet
visit website
