Investment body condemns Texas comptroller over divestment ban
The Investment Company Institute criticised Glenn Hegar’s attempt to prevent companies that boycott fossil fuels from doing business with the Lone Star State.
The Investment Company Institute (ICI) has criticised Texas Comptroller Glenn Hegar, following the regulator’s move to ban state investment in companies omitting fossil fuels.
On August 24, Hegar released a list of financial companies that he said were actively boycotting energy companies.
Following an “exhaustive period” of research, Hegar’s office published a list of ten financial services firms boycotting energy companies and nearly 350 funds subject to these provisions.
Under a 2021 state law, Texas has banned these firms from doing business with the state after their lack of support for the oil and gas industry.
This includes BlackRock, BNP Paribas, Credit Suisse, Danske Bank, Jupiter Fund Management, Nordea, Schroders, Svenska Handlesbanken, Swedbank and UBS.
The ICI has since criticised Hegar and the state of Texas for adopting this stance.
A statement from the ICI reads: “Texas state pension managers have a fiduciary duty to act in the best interest of state employees.
“However, a state-mandated boycott of certain funds could restrict their ability to choose from the full range of available investments on behalf of Texas state retirees. This decision impacts billions of dollars in retirement savings for many Texans.”
The ICI is now pushing for this ban to be reversed in order to reintroduce choice and flexibility in the state for pension fund investors.
The 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
Republican anti-ESG shift
When announcing the ban, Hegar said: “The 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.
“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.”
ESG investment, and its involvement with net zero, has become increasingly politicised in the US.
Republican lawmakers have increasingly disavowed net-zero investment practices as President Bident has shown his support.
Last week, Republican Florida governor Ron DeSantis passed a resolution eliminating ESG considerations from state pension funds.
And in June 2022, the State Financial Officers Foundation, a Republican organisation, wrote to the Securities and Exchange Commission highlighting concerns over incoming ESG disclosure rules.
