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Texas has lifted the ban on BlackRock, allowing the investment giant back into its state funds three years after it criticized the company’s environmental stance.
This move by state comptroller Glenn Hegar enables Texas pension and investment funds, valued at around $300 billion, to purchase shares and invest in BlackRock’s offerings. Additionally, state-managed funds can now reach out to the New York firm for financial advice and risk management solutions.
Earlier this year, BlackRock withdrew from the UN-backed climate initiative, the Net Zero Asset Managers, following its decision to exit the Climate Action 100+ alliance in 2024.
The announcement made on Tuesday represents a win for Texas legislators and the oil and gas sector, which have worked to oppose asset managers who are adjusting their investment strategies to address climate change.
Hegar remarked, “This is a significant win and affirms Texas’s leadership on this issue, marking a major change in how firms, governments, and Americans perceive the energy industry.”
BlackRock expressed gratitude for the comptroller’s decision, noting that the over $400 billion its clients have invested in Texas contributes to the state’s economic development.
The firm has faced criticism from states that typically vote Republican, some of which have enacted laws restricting state investments with companies that adhere to particular environmental, social, and governance principles.
Currently, BlackRock is entangled in a legal dispute with the Texas attorney general, who claims that BlackRock and some rival firms colluded illegally to influence energy markets in alignment with their green policies. This week, BlackRock stated that the lawsuit lacks credibility, both factually and legally.
Once a strong advocate for corporate environmental actions, BlackRock’s CEO Larry Fink used his 2020 letter to CEOs to emphasize that “climate risk is investment risk.”
“Every sector, organization, and investor must tackle climate change,” he stated, outlining various initiatives aimed at placing sustainability at the core of their investment strategies.
However, in subsequent years, BlackRock has become a target for conservative lawmakers striving to limit how the $11.6 trillion asset manager wields its market influence to shape corporate practices.
In 2022, Hegar included BlackRock and several other financial firms, like BNP Paribas and UBS, on Texas’s blacklist, aimed at changing the investment approaches of a $200 billion teachers’ pension fund and a government employee retirement fund exceeding $40 billion.
BlackRock has been attempting to mend its relationships with those clients, shifting away from the ESG narrative. Fink has even stated that he ceased using the term “ESG” because it has been weaponized against them.
On Tuesday, Hegar stated, “We never intended to punish these firms; our goal was always for those on the list to make necessary changes to be removed.”
He also noted that BlackRock’s choice to reduce support for activist investors advocating for less fossil fuel use reflects a “genuine commitment to policy changes and a wish to be seen as a trusted ally.”
