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BlackRock's (BLK) retreat from environmental, social, and governance (ESG) initiatives has it back in good stead with a key Texas official, a victory for CEO Larry Fink, even as the world's largest money manager remains a target of the state's antitrust cops.
Texas Comptroller Glenn Hegar announced on Tuesday that the Lone Star State had struck BlackRock from a list of financial companies that, by law, are mostly prohibited as state contractors and investments. Texas added BlackRock to that list in 2022, restricting state businesses with the Wall Street giant.
Hegar said in a statement that BlackRock "has acknowledged the real social and economic costs, both here in Texas and globally, that come from limiting investment in the oil and gas industry."
Since 2021, Texas law SB13 has required the comptroller's office to list companies that harm, penalize, or limit commercial relations with companies in the fossil fuel industry, Texas's largest economic driver. It requires state agencies to block and divest state investments in those firms unless they qualify for an exemption.
Hegar said the decision to take BlackRock off the boycott list was "in part because it stepped back from full participation in the Climate Action 100+ and completely exited the Net Zero Asset Managers initiative" and because it "dramatically reduced" its fund offerings that boycotted fossil fuel investments.
"We appreciate the comptroller's resolution of this matter," BlackRock said in a statement. "BlackRock is proud to help millions of Texans retire with dignity and, on behalf of clients, invests over $400 billion in corporations, local governments, energy infrastructure and other private assets throughout the state."
Texas's status change for BlackRock comes after Fink made a series of disengagements from the firm's ESG initiatives as bipartisan concerns spread over the financial giant's power to sway US markets.
Fink publicly stated in June 2023 that he would cease using the politically sensitive acronym "ESG" because it had been "weaponized" by both the ideological right and the left.
In January, the financial giant cut ties with UN-backed Net Zero Asset Managers Initiative, an environmental advocacy group that pledged net-zero carbon emissions by 2050.
But the comptroller's embrace of BlackRock hasn't yet stopped Texas Attorney General Ken Paxton from pushing ahead with a legal fight to dilute BlackRock's and two other US financial giants' alleged influence over the fossil fuel industry.
