BlackRock criticized Texas' decision to pull $8.5 billion from its asset manager's funds, calling the move “reckless” and negatively impacting the state's school and family finances.
“Your actions emphasize short-term politics over long-term fiduciary responsibility,” BlackRock Vice Chairman Mark McComb wrote in a letter to Texas Board of Education Chairman Aaron Kinsey on Thursday. We are making it a priority.” “We were disappointed.”
Mr. McComb urged Mr. Kinsey and the board to reconsider, arguing that BlackRock has worked with the Texas Permanent School Fund for nearly 20 years and has achieved strong investment results with competitive fees. The firm's international investment obligations outperformed the fund's own benchmark during that period and generated more than $250 million for Texas, the letter said.
“It would be irresponsible to end in such a reckless manner a long and successful partnership that has been a positive force for thousands of Texas schools and families,” McComb wrote. “How clients invest and who they entrust to manage their money is entirely their decision, but I believe that actions of this scale require transparency and consensus, rather than politically driven decisions. We are thinking.”
The Texas sale is one of the biggest moves against BlackRock in the nation's Republican Party's three-year anti-ESG campaign. One of the few comparable moves was the state of Florida's announcement that it would withdraw $2 billion from the New York-based company at the end of 2022.
Kinsey said earlier this week that the fund's leadership terminated its relationship with BlackRock to comply with a 2021 Texas law that limits investments in companies that engage in so-called boycotts of the fossil fuel industry. BlackRock is on a list of companies that State Comptroller Glenn Hegar is considering joining in such a boycott.
BlackRock has long disputed this, and McComb said the $10 trillion fund manager holds more than $320 billion in global energy investments, including about $120 billion in publicly traded energy companies based in Texas. He said he is doing so.
Shilla Brush and Amanda Albright, Bloomberg
