Texas’ Largest Pension Divests From BlackRock to Comply With Law

Texas’ biggest pension fund has divested its direct ownership stakes in BlackRock Inc. and several other financial firms to comply with a state law prohibiting investing in companies deemed to be discriminatory against the oil and gas industry.

The Teacher Retirement System of Texas sold shares in BlackRock, Credit Suisse Group AG and several other firms and funds to remain in compliance with the law, according to a letter to Texas officials dated Dec. 31 and obtained by Bloomberg on Monday. The letter from Executive Director Brian Guthrie didn’t cite the value of the divestitures. The pension has about $173 billion in assets under management.

Texas is one of a growing number of states cracking down on Wall Street for pursuing investment strategies that consider a company’s environmental, social and governance record. BlackRock, an outspoken advocate for ESG, has borne the brunt of the criticism. Six states have said they plan to pull more than $3 billion from BlackRock, while House Republicans are pushing back on the Biden administration’s efforts to bolster ESG investing.

Republican state officials across the US, including treasurers, attorneys general and Florida Governor Ron DeSantis, campaigned against ESG investing, contending the strategy promotes social or ideological interests at the expense of investment performance.

In August, the Texas comptroller’s office released a list of companies and funds that it deemed as boycotting the energy industry and thus would be subject to divestment by state agencies. Pensions are still allowed to hold indirect stakes in those firms through vehicles such as exchange-traded funds.

In total, the Teacher Retirement System of Texas stated it sold from the following entities and funds:

BNP Paribas SA
Credit Suisse
Danske Bank A/S
Jupiter Fund Management Plc
Nordea Bank ABP
Schroders Plc
Svenska Handelsbanken AB
Swedbank AB
UBS Group AG
BlackRock Tactical Opportunities Fund

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