The Texas Schools Fund withdraws $8.5 billion from BlackRock due to ESG investments

A Texas school fund announced its termination of BlackRock’s $8.5 billion contract, accusing the investment giant of boycotting fossil fuel energy producers. BlackRock denied the allegations, emphasising the withdrawn funds’ insignificance compared to its $10 trillion portfolio.

This move highlights ongoing controversies over Environmental, Social, and Governance (ESG) investing in Republican-led states. The fund’s chair cited state laws against investing in firms boycotting energy companies.

Compliance with a 2021 Texas law mandating divestment from such firms was noted, given the fund’s reliance on annual revenues of approximately $1 billion from Texas’s oil and gas industry.

While some BlackRock investments remain, they will phase out gradually. BlackRock criticised the termination as arbitrary, noting its substantial $120 billion investment in Texas public energy firms. CEO Larry Fink cited a $4 billion loss due to political backlash last year but emphasised that net inflows to BlackRock outweighed it.