BlackRock (BLK) retreated from the Environmental, Social, and Governance (ESG) initiative, which made it a great deal with key Texas officials, a victory for CEO Larry Fink, even if the world's largest currency manager remains the target of the state's anti-pollution police.
Texas Comptroller Glenn Hegar announced Tuesday that the Lone Star State has hit Blackrock from a list of a series of financial companies, mostly banned as state contractors and investments. Texas added Blackrock to the list in 2022, limiting the state of Wall Street Giant's business.
BlackRock “has recognized the real social and economic costs in Texas and globally, due to restrictions on investment in the oil and gas industry,” Hega said in a statement.
Since 2021, Texas Law SB13 requires the Office of the Auditor General to list companies that damage, punish or limit business relations with companies in Texas' largest economic driver. It requires state agencies to block and divest state investments if these companies are eligible for exemptions.
Hegar said the decision to remove BlackRock from the boycott list was "partially because it took a step back from full participation in 100+ climate action and completely withdrew from the Zero Asset Net Asset Manager Initiative" and because it "significantly lowered" its products to its funding, making it boycott fossil fuel investments.
"We thank the Comptroller for your resolution on this matter," BlackRock said in a statement. "BlackRock is honored to help millions of Texans retire with dignity and invest more than $400 billion in companies, local governments, energy infrastructure and other private assets across the state," BlackRock said in a statement.
Texas's position to BlackRock changes came after Fink made a series of disconnects to the company's ESG plan as bipartisan concerns spread over financial giants' swaying power in the U.S. market.
Fink publicly stated in June 2023 that he would stop using the politically sensitive acronym "ESG" because it has been "weaponized" by the ideological right and left.
In January, the financial giant cuts its ties with the unsupported net zero asset manager initiative, an environmental advocacy group that promises net zero carbon emissions by 2050.
But the auditor-general’s embrace of BlackRock has not stopped Texas Attorney General Ken Paxton from a legal battle to dilute the impact of Blackrock and two other U.S. financial giants on the fossil fuel industry.
Paxton and 10 other Republican-led states filed antitrust cases in November against trillion-dollar asset managers and their rivals State Street (STT) and Pioneer, attracting support from the U.S. Department of Justice and the Federal Trade Commission last week.
The case said BlackRock and its rival financial companies coordinated the "left-wing ideological" attack on U.S. coal companies by putting pressure on coal producers such as Arch Coal, Black Hills (BKH) and Peabody (BTU) to reduce coal production in the southern Powder River Basin and hot coal markets.
They say the decline in output hurts U.S. consumers by artificially expanding energy prices.
The complaint says that as a major shareholder of large but minority shareholders, the defendant's influence exceeds his official equity share. With this impact, they claimed, the defendants agreed to reduce output through commitments to the reduction organization, Net Asset Manager Initiative and Climate Action 100+.
AG Paxton's office did not immediately respond to a request asking whether the state would remove Belek from the list of comptrollers would affect antitrust claims. However, the evacuation shows that the state no longer regards BlackRock as a company that damages, punishes or limits business relations with companies in the fossil fuel industry.
BlackRock asked the judge to dismiss the case and accused the government of trying to "rewrite" antitrust law under a "absurd" theory that plotted to reduce production output.
“Forcing asset managers to evacuate from coal companies will damage their ability to obtain capital and invest in their businesses and employees, which could lead to higher energy prices,” the company said in a statement.
Alexis Keenan is a legal journalist at Yahoo Finance. Follow Alexis on X @AlexiskWeed.
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