Faced with declining Texas, BlackRock says it’s subsidizing fossil fuels

BOSTON, Feb 17 (Reuters) – At risk of falling out of Texas pension funds, BlackRock Inc. (BLK.N) It reinforced its message that the world’s largest asset manager is a friend of the oil and gas industries.

As a large, long-term investor in fossil fuel companies, “we want to see these companies succeed and thrive,” BlackRock executives wrote in a letter the spokesperson confirmed was sent at the beginning of the year to officials, trade groups and others. In the energy-rich state of Texas.

“We will continue to invest in and support fossil fuel companies, including fossil fuel companies in Texas,” says the memo signed by Dalia Blass, BlackRock’s chief foreign affairs officer, and transcribed to Mark McComb, BlackRock’s chief customer officer.

Although the message is consistent with its other statements, the focus has become new after years in which BlackRock emphasized its efforts to take climate change and other Environmental, Social and Governance (ESG) issues into account in its investment decisions and proxy voting. Read more

BlackRock faces a balancing act as some pension and endowment funds move to dump fossil fuel stocks due to climate change concerns, and because of its size. Like competitors, BlackRock refused to follow suit. Read more

The US Securities and Exchange Commission is developing a new rule on corporate disclosures related to climate change. Read more

In Texas, new legislation requires the state’s comptroller, Glenn Hegar, to draw up a list of financial companies that boycott fossil fuels. These companies could then be barred from state pension funds like the $197 billion Texas Teachers’ Retirement System, which has about $2.5 billion with BlackRock.

A spokesperson for Republican Hegar said by email that his agency is “currently working on identifying suitable candidates for the divestment list.”

“We have not and will not boycott energy companies,” BlackRock wrote in its letter, citing holdings in Texas-based companies such as Exxon Mobil Corp. (XOM.N)ConocoPhillips (COP.N) Kinder Morgan, Inc (KMI.N).

Texas Governor Dan Patrick, a Republican, has called on Hegar to put BlackRock first on the list, citing among other things BlackRock’s statements in support of the companies’ “net-zero” goals to reduce emissions. This amounts to a boycott under the new Texas law, Patrick wrote in a letter dated January 19, by invoking environmental standards that go beyond federal and state laws.

Several other top asset managers including Vanguard Group and State Street Corp (STT.N) It has adopted similar efforts such as signing up to the Net Zero Asset Managers initiative.

Patrick’s office did not respond to questions.

The BlackRock message was first posted online on Twitter by Alex Epstein, author of a book supporting the use of fossil fuels.

(This story corrects the third paragraph to show that the letter was copied to Macomb, and not signed by Macomb)

(Reporting by Ross Kerber) Editing by Margarita Choi

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