GOP-led states ban pension plans from dealing with companies that support ESG

Environmental, social and governance precepts are popular among some US institutional investors, especially university endowments. But now a backlash is building in Republican-led state governments, especially in fossil fuel-producing regions.

In Texas, West Virginia and Kentucky, legislatures have demanded public funds to limit transactions with companies that sell oil, natural gas and coal, according to news reports. West Virginia and Arkansas recently pulled pension funds run by BlackRock, whose leader has spoken out on tackling climate change.

In Texas, a new law prevents state agencies from doing business with companies that the state comptroller says are “boycotting” fossil fuels. It’s unclear how much fossil fuel state pension programs hold, as does the extent of their relationships with companies that follow ESG precepts.

Texas Comptroller Glenn Hegar sent a letter to 19 financial firms, including BlackRock, JPMorgan Chase and Wells Fargo, asking about their fossil fuel divestment practices. “Our research so far shows that some companies tell us and other energy-producing states one thing, then turn around and say something else to their liberal customers in other states,” said Hegar in a press release.

The companies responded that they were not boycotting fossil fuels, a Reuters report said. BlackRock, for example, said its fiduciary duty required it not to shun any class of stock, though it added that the company also supports projects aimed at reducing greenhouse gas emissions.

BlackRock said it manages $24 billion for Texas public pension plans and invests in $8.3 billion of private projects in the state, such as a natural gas utility and a pipeline system. carbon capture.

Company CEO Larry Fink urged other business leaders to push for ESG initiatives. Last spring, BlackRock backed three dissident directors running for election to ExxonMobil’s board who wanted to tackle the oil giant’s reluctance to switch to renewables.

Since Texas passed its bill last year, at least seven other states have considered or passed similar legislation. Last fall, a consortium of 15 mostly GOP-led state treasurers released a letter saying they would no longer do business with financial firms that “boycotted” fossil fuels.

Idaho passed a law in March prohibiting the investment of public funds in companies that prioritize ESG commitments over returns.

At the Republican Party convention in Utah in April, thousands of attendees cheered when Sen. Mike Lee compared green investments to critical race theory — another term conservatives associate with liberal madness. : “Between CRT, ESG and MSNBC, we get way too many BS”. said Lee.

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Tags: BlackRock, ESG, Glenn Hegar, Idaho, Kentucky, Larry Fink, Mike Lee, Texas, Utah, West Virginia

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