Texas politicians reinstate BlackRock as manager’s ties to the state grow

Public funds in Texas can work with BlackRock once again after legislators removed it from a blacklist of companies accused of “boycotting” the oil and gas industry. The decision comes as Texas’s administration found alignment with the asset manager which backed key economic initiatives including the Texas Stock Exchange.

Texan pension and state funds can invest with and buy shares in BlackRock once again after legislators removed the $11.5 trillion asset manager from a blacklist of companies accused of “boycotting” the oil and gas industry.

The decision, announced by Texas comptroller Glenn Hegar this Tuesday, reflects a new alignment between Texas’s Republican politicians and BlackRock.

Hegar declared the rollback a “meaningful victory” for the energy sector which is the biggest contributor to the state’s GDP, adding that the decision to allow the state’s pension funds to invest with BlackRock again is partially related to the asset manager stepping back from climate commitments. BlackRock dropped its participation with Climate Action 100+ in 2024 and the Net Zero Asset Managers alliance earlier this year.

BlackRock is a founding investor of the new Texas Stock Exchange set to debut in 2026 alongside Citadel Securities, Charles Schwab and other investors. The asset manager also plans to launch an exchange-traded fund that will invest in companies based in Texas. The iShares Texas Equity ETF will track the investment results of the Russell Texas Equity index, which will measure the performance of equity securities of US companies headquartered in Texas.

Hegar acknowledged BlackRock’s role in the local economy but said the decision to reinstate the asset manager was “unrelated.” He added, “[These actions] nonetheless show a real commitment to overall policy changes and a desire to act as a trusted partner in the growth of the Texas economy.”

“The firm also has acknowledged the real social and economic costs, both in Texas and globally, that come from limiting investment in the oil and gas industry. In short, it is engaging in a more intellectually honest conversation.”

Investors, including the $56 billion Texas Permanent Fund, $33.2 billion Employees Retirement System of Texas, $35 billion Texas Municipal Retirement System and $211 billion Teachers Retirement System, can also turn to the asset manager for financial advice and risk management.

The rapprochement came three years after the comptroller’s office added BlackRock to a list of names that still includes BNP Paribas, Schroders and UBS, from which public agencies should divest due to their environmental policies.

Last year, the $53 billion Texas Permanent School Fund (PSF) moved $8.5 billion from BlackRock to other asset managers in line with the law.

“Companies pushing anti-Texas policies and woke indoctrination have no place in Texas public education, whether in the classroom or as investments in Texas Permanent School Fund,” Tom Maynard, chair, Texas PSF said at the time. “We will continue to defend our Texas values while generating more resources to support the school children of Texas.”

In 2023, TRS sold its direct ownership stakes in BlackRock and the other companies identified by the Comptroller as boycotting energy companies.

However, the law also contained carve-outs and allowances for continued business under fiduciary obligations.

According to its most recent 2024 annual report, TRS still uses BlackRock to manage assets, naming the asset manager in its list of external managers. “We have adhered to Texas law around this,” said a spokesperson from TRS.

Investors subject to pressure on how they invest from politicians have withstood similar laws. For example, in 2023 the board of $11 billion Kentucky County Employees’ Retirement System informed state Treasurer Allison Ball it would not divest from BlackRock citing fiduciary duty. The manager oversees about 30 per cent of the pension fund’s international equity portfolio.

BlackRock’s chief executive Larry Fink, once a vocal supporter of corporate action on the environment, partnered with the state on a PowerGrid Investment Summit last year and BlackRock has remained a significant source of capital for Texan companies. According to its website it invests over $400 billion invested in the state of which public energy companies account for around $134.6 billion.

BlackRock is still blacklisted by other Red states including Oklahoma and Indiana due to ESG investments. At the end of 2024, $46 billion Indiana Public Retirement System voted to remove BlackRock from managing the pension fund’s $969 million global fixed-income portfolio.

See also The politicisation of investments at US public funds.