Texas bans financial firms from doing business with state agencies

Sign up for The Brief. This is a daily newsletter that keeps readers up to date on the most important Texas news.

The state of Texas banned 10 financial firms from doing business with the state after auditor Glenn Hegar said on Wednesday that it was not supporting the oil and gas industry.

Heger, a Republican who is running for re-election in November, said BlackRock, other banks and investment firms, and some investment funds of big banks such as Goldman Sachs and JP Morgan, have since gone to state and local governments. Banned most contracts from the organization. Hegar’s office said the company was “boycotting” the fossil fuel sector.

Hegar sent inquiries to hundreds of financial firms earlier this year asking for information on whether they are avoiding investments in the oil and gas industry in favor of renewable energy companies. The investigation is the result of a new Texas law that went into effect in September, banning most state agencies and local governments from contracting companies that have cut ties with carbon-emitting energy companies. I’m here.

State pension funds and local governments that issue municipal bonds, with some exceptions, will have to sell from companies on the list, Hegar said.

“Environmental, social and corporate governance (ESG) trends have created an opaque and twisted system. Using financial clout instead, the social and political agenda is shrouded in secrecy,” Hegar said in a statement Wednesday.

New York-based BlackRock, which has openly embraced increased investment in renewable energy, criticized Heger’s decision.

“This is not a factual judgment,” a company spokesperson said in a statement. “BlackRock will not boycott fossil fuels. He has proven to have invested over $100 billion in Texas energy companies on behalf of his customers.

“Elected and appointed public officials have a duty to act in the best interests of those they serve,” the spokesperson added. “Politicizing public pension funds, restricting access to investments, and affecting the economic interests of retirees is inconsistent with that mandate.”

The other 9 companies that have been completely banned are: Switzerland-based Credit Suisse Group AG and UBS Group AG. Danske Bank A/S, a Danish multinational banking and financial services company. Jupiter Fund Management PLC, a fund management group based in London. Nordea Bank ABP, a European financial services group based in Finland. Schroders PLC, a British multinational asset management company. Swedish banks Svenska Handelsbanken AB and Swedbank AB.

Large corporate funds are aimed at sustainable investing, such as Goldman Sachs’ Paris-aligned Climate Change US Large Cap ETF and JP Morgan’s US Sustainable Leaders Fund.

Texas energy experts said the law and Wednesday’s announcement were intended to punish financial firms unwilling to invest in oil and gas, the backbone of the Texas economy.

“But in the end, it’s all about the rate of return,” says Ed Hirs, an energy economist at the University of Houston. “To be honest, fossil fuel companies, especially oil and gas companies, haven’t done great in the stock market before this year.”

The Lone Star branch of environmental group Sierra Club said Hegar’s “climate change denial propaganda will cost taxpayers.”

“Major financial institutions such as those on this list would do well to address the financial risks of the climate crisis, as investing in fossil fuels poses significant risks in the face of the inevitable clean energy transition. We’re starting to realize that it’s a business imperative,” said Ben Cushing, fossil-free financial campaign manager at the Sierra Club. “The fact that the Texas State Comptroller has arbitrarily selected a handful of companies that continue to invest heavily in fossil fuels despite their commitment to climate change means that this It shows that it is nothing more than a political stunt at the expense of

James Coleman, a professor of energy law at Southern Methodist University, said political pressure is driving both sides of the debate.

“Not only from those who want to reign on fossil fuels, but also from those who are worried that moving away from fossil fuels will hurt them economically,” Coleman said.

But Coleman said, “Any time a state limits the potential world that can be traded, it could potentially leave some profits on the table.”

Felix Morman, a Texas A&M University law school professor who studies energy and climate change, said it’s difficult to predict the actual impact on Texas taxpayers. He called Wednesday’s move “a symbolic act by the General Accounting Office to protest the rise of ESG investing.”

“Will this announcement give Texas oil and gas companies a boost? Morally, maybe,” Moerman wrote in an email to the Texas Tribune. “Financially, however, Chevron, ExxonMobil, and other Texas oil and gas giants are playing in the global league. I don’t think it’s causing it.”

Hegar accused Harris County of cutting spending on constable offices this week as political campaigns heat up ahead of the November election. Republicans used Heger’s accusations as an opportunity to criticize Lina Hidalgo County Judge Lina Hidalgo County, the county’s Democratic chief executive who is seen as a rising star within the party, as they face a re-election race in November.

Last week, Hegar announced that Texas would support eliminating state taxes on menstrual products such as tampons and sanitary pads. This is the position of Governor Greg Abbott as well.

Disclosure: Exxon Mobil Corporation, Southern Methodist University, Texas A&M University, Texas A&M University School of Law, and the University of Houston are part of The Texas Tribune, a non-profit, bipartisan news organization funded in part by contributions from its members. is a financial backer, foundation and corporate sponsor of Financial backers play no part in Tribune journalism. Find their complete list here.

---

The full program of the 2022 Texas Tribune Festival, September 22-24 in Austin, is live now. Inside tracks for the 2022 elections and the 2023 legislative session, the state of public and higher education institutions at this stage of the pandemic, why Texas suburbs are booming, why broadband, and more, the 100 things planned for TribFest Check out the schedule of mind-expanding conversations above. Access issues, the legacy of slavery, what really happened at Uvalde, and more. See program.