Texas teacher pension fund divested from funds that “boycotted” oil and gas

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The Teacher Retirement System of Texas has divested a part of its large pension fund from 10 monetary corporations that the state comptroller singled out for “boycotting” the oil and gas trade.

In 2021, Texas lawmakers prohibited state funds from contracting with or investing in corporations that divest from oil, pure gas and coal corporations. In August, Comptroller Glenn Hegar launched a list of 10 investment firms and a number of funds that could be blocked from doing enterprise with the state attributable to their climate-change-conscious funding methods.

Financial corporations in recent times have elevated their commitments to environmental, social and governance — or ESG — methods that try and account for the damaging societal prices of investing in corporations that worsen local weather change, use exploitative labor practices or have interaction in company corruption.

In December, Brian Guthrie, the Teacher Retirement System’s government director, wrote to state officers confirming that the fund had complied with the regulation by promoting its shares in these corporations — together with highly effective institutional investor BlackRock Inc.

“TRS does not hold any shares directly in the financial companies identified by the Comptroller as boycotting energy companies,” Guthrie wrote in a letter, first reported by Bloomberg Law, to Texas House Speaker Dade Phelan, Lt. Gov. Dan Patrick and Attorney General Ken Paxton on Dec. 31.

Rob Maxwell, TRS spokesperson, declined to touch upon the overall worth of the belongings divested from the fund.

Almost 2 million Texas educators and retirees take part within the teacher’s pension fund, which is worth about $173 billion. It’s the sixth-largest such pension fund within the U.S., based on Pensions & Investments journal, which produces an annual analysis.

Other state funds sure by the law embody the $56 billion Texas Permanent School Fund, the most important such Okay-12 fund within the U.S.; the $33.2 billion Employees Retirement System of Texas; and the $35 billion Texas Municipal Retirement System.

The regulation allowed every of the funds to request an exemption if divesting would cut back the worth of the fund. The Teacher Retirement System didn’t request an exemption.

A September letter from the Texas Municipal Retirement System to Hegar, obtained by The Texas Tribune, mentioned that the fund didn’t personal any securities from the listed corporations. The Permanent School Fund didn’t instantly reply to request for remark.

In 2020, BlackRock garnered world consideration when its CEO referred to as on different company leaders to scale back greenhouse gas emissions associated to their corporations’ operations that trigger local weather change — a transfer that made BlackRock a top target of Texas Republicans who noticed it as an assault on the state’s highly effective oil and gas trade.

During a 2022 hearing, Dalia Blass, senior managing director and head of exterior affairs of BlackRock’s world government committee, instructed Texas lawmakers that BlackRock’s environmental initiatives haven’t stopped the agency from investing in oil and gas. BlackRock had invested about $107 billion in Texas power corporations in the newest quarter, Blass mentioned.

Some funding corporations have adopted ESG methods that grade corporations on whether or not they contribute to societal issues like local weather change, and some have additionally created particular funding funds geared toward shoppers who need to make investments into funds that meet sure ESG standards.

ESG belongings within the U.S. accounted for about 13% of the overall professionally managed belongings final yr, price about $8.4 trillion, according to a report by the US SIF, an trade group representing institutional traders with sustainability investments.

The 10 corporations focused by Texas for divestment are BlackRock Inc.; BNP Paribas SA, a French worldwide banking group; Swiss-based Credit Suisse Group AG and UBS Group AG; Danske Bank A/S, a Danish multinational banking and monetary providers company; London-based Jupiter Fund Management PLC, a fund administration group; Nordea Bank ABP, a European monetary providers group based mostly in Finland; Schroders PLC, a British multinational asset administration firm; and Swedish banks Svenska Handelsbanken AB and Swedbank AB. The comptroller additionally recognized particular funds with an ESG emphasis that are managed by bigger corporations for divestment.

Disclosure: The Texas comptroller of public accounts has been a monetary supporter of The Texas Tribune, a nonprofit, nonpartisan news group that is funded partially by donations from members, foundations and company sponsors. Financial supporters play no position within the Tribune’s journalism. Find an entire list of them here.