BlackRock pushed back on Texas' decision to pull $8.5 billion in investment from the asset manager over ESG policies.
The world's largest asset manager, BlackRock,
is pushing back on Texas' decision to withdraw roughly $8.5 billion in
assets belonging to the Texas Permanent School Fund (PSF) over what the
state says is a boycott of energy companies.
Texas State Board of Education Chairman Aaron Kinsey on Tuesday
announced that the PSF would withdraw funds to comply with a 2021 state
law that seeks to prevent the state's public funds from being managed by
financial institutions that boycott the oil and gas sector. Kinsey said
that "BlackRock's destructive approach toward the energy companies that
this state and our world depend on is incompatible with our fiduciary
duty to Texans."
BlackRock Vice Chairman Mark McCombe responded to
Kinsey in a letter reviewed by FOX Business in which he wrote that the
firm was "dismayed by your announcement" and said the decision puts
"short-term politics over your long-term fiduciary responsibilities."
"We urge you to reconsider your decision and prioritize Texas schools and families
who have benefited from BlackRock's consistent, long-term investment
outperformance," McCombe wrote. He added that BlackRock has delivered
"consistently strong performance for Texas PSF" over nearly two
decades.
"Our international mandate outperformed Texas PSF's own benchmark
since our partnership began in 2006 — generating in excess of $250
million for Texas PSF — with competitive fees. Fiduciaries should
prioritize performance and fees when executing their duty," McCombe
added.
He went on to dispute the state of Texas' finding that BlackRock boycotts oil and gas
companies, saying that the company is in compliance with the law cited
as precipitating the PSF pulling its funds from the firm.
"We
fully comply with Texas law and fundamentally disagree with your
assessment based on BlackRock's performance for Texas PSF and our
investments in Texas energy companies.
Additionally, Senate Bill 13 makes clear divestment is not required
when a government entity determines divestment is inconsistent with its
fiduciary responsibilities," he explained. "The outperformance BlackRock
has demonstrated shows divestment would not be in the best interest of
Texas PSF."
BlackRock,
led by CEO Larry Fink, disputed that the company boycotts oil and gas
companies and said that the Texas PSF should be more transparent about
how it arrived at the decision to pull its $8.5 billion investment.
McCombe
also took issue with the manner in which Texas PSF informed BlackRock
of the decision and wrote that "the process by which this decision was
reached remains unclear to the public."
"We learned of your
decision to end Texas PSF and BlackRock's 18-year relationship through a
press release. Ending a long, successful partnership that's been a
positive force for thousands of Texas schools and families in such a
reckless manner is irresponsible," he explained.
"We've come to learn that not all Texas PSF board members were made
aware of your decision before it was announced and did not have an
opportunity to ask questions or share views," McCombe wrote.
"How
our clients invest and whom they entrust to manage their money is
entirely their decision, but we feel an action of this magnitude
warrants transparency and consensus — not political-driven decision
making. Texas schools and families deserve that."
Texas
State Board of Education Chairman Aaron Kinsey cited a state law
restricting investments with financial firms that boycott oil and gas
companies as the rationale for the investment withdrawal.McCombe concluded the letter by saying the "welfare of all Texans
remains our shared priority" and that the asset manager is "asking for a
reevaluation of your decision in order to preserve the productive and
mutually advantageous relationship between Texas PSF, our company, and
the Texans we serve."
1 comment:
Don't Mess with Texas. (ABC)
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