Texas comptroller directs state agencies to divest from companies that are promoting ESG

(The Center Square) – Texas Comptroller Glenn Hegar has directed six state agency systems to identify if they are using, and then divest from, nearly 350 individual investment funds and 10 financial companies that are boycotting Texas energy companies and promoting ESG.

The comptroller is required by state statute to prepare and maintain a list of financial companies that boycott energy companies. His office and the Texas Treasury Safekeeping Trust Company identified them. They include Blackrock, Inc., BNP Paribas SA, Credit Suisse Group AG, Danske Bank A/S, Jupiter Fund Management PLC, Nordea Bank ABP, Schroders PLC, Svenska Handelsbanken AB, Swedbank AB, and UBS Group AG.

“The environmental, social and corporate governance (ESG) movement has produced an opaque and perverse system in which some financial companies no longer make decisions in the best interest of their shareholders or their clients, but instead use their financial clout to push a social and political agenda shrouded in secrecy,” Hegar said.

“Our review focused on the boycott of energy companies, rather than a review of the entire ESG movement. This research uncovered a systemic lack of transparency that should concern every American regardless of political persuasion, especially the use of doublespeak by some financial institutions as they engage in anti-oil and gas rhetoric publicly yet present a much different story behind closed doors. This list represents our initial effort to shine a light on entities that are engaging in these practices and create some clarity for Texans whose tax dollars may be working to directly undermine our state’s economic health.”

Hegar said he published the list after his office conducted extensive research into their business practices, noting that there was a lack of transparency.

“The lack of transparency in the sector added to the challenge we faced in gathering the necessary information, and I recognize that there will likely be disagreements concerning whether a particular financial company is a suitable candidate for listing,” he said. “We will continue to refine this process and gather additional information about how these firms may be boycotting energy companies. I am particularly interested in the misguided activism surrounding proxy voting. Some of these firms may be using investments essentially owned by Texas to directly push shareholder initiatives that run contrary to the interests of our state.”

He directed the Employees Retirement System of Texas, Teacher Retirement System of Texas, Texas Municipal Retirement System, Texas County and District Retirement System, Texas Emergency Services Retirement System and the Permanent School Fund to notify his office within 30 days about which financial companies on the list own direct or indirect holdings of state funds.

The state systems are also required to submit a report by Jan. 5 to the state legislature and the attorney general identifying all securities sold, redeemed, divested or withdrawn in compliance with state law.

Hegar released the list as Texas Gov. Greg Abbott and the oil and natural gas industry continue to face a “hostile federal regulatory environment hampering new domestic energy exploration and production.”

In January, Abbott issued an executive order to protect the Texas energy industry from federal overreach. He’s also been fighting for months against the EPA’s stated plan to cripple oil and natural gas production in the Permian Basin.

“A diverse energy portfolio is necessary for Texas to meet our future energy needs, and a vibrant Texas oil and gas industry is a stabilizing force in today’s economic and geopolitical environment,” Hegar said. “My greatest concern is the false narrative that has been created by the environmental crusaders in Washington, D.C., and Wall Street that our economy can completely transition away from fossil fuels, when, in fact, they will be part of our everyday life into the foreseeable future. A complete divestment of the industry is not only impractical and illogical but runs counter to the economic well-being of Texas and our citizens.”

Ed Longanecker, president of Texas Independent Producers and Royalty Owners Association, told The Center Square, “Now more than ever, we need continued investment in Texas energy. As demand for oil and natural gas has soared, Texas has stepped up. Production in the Permian Basin alone has hit record highs this year. But for Texas to remain an energy leader, we need to continue investing in production as well as pipelines and other infrastructure. That requires a predictable regulatory environment, which is what Texas is known for. Global energy consumption is set to grow 50 percent by 2050, and we simply cannot meet that demand without oil and gas.”

Richard Welch, a board member of the Midland-based Oil & Gas Workers Association, told The Center Square, that ESG ratings coupled with over-regulating makes acquiring funding for oil and natural gas projects unfavorable to potential investors. “The banking system has been discriminating against the oil and natural gas industry by imposing higher than average, government approved, loan rates of up to an additional 2.5 interest points above other companies not in the industry,” he said. The Biden administration’s “openly using the financial system and ESG to discriminate against the industry after it’s already been discriminating against it on multiple fronts, hindering growth and production,” he said.

“Worse still, the mainstream media and news companies are using oil and natural gas products to publish Biden’s woke agenda on ‘green’ energy,” he adds. “From the laptops they type on, to the phones they call on to the vehicles they drive—all of the tools they use to do their jobs wouldn’t exist without the very industry they negatively write about.”

The comptroller’s announcement comes after the state of Florida moved to divest its retirement system from investing in funds that prioritize ESG.