Claims ESG investors “push a social and political agenda shrouded in secrecy”
Investment and finance giants BlackRock, Credit Suisse and UBS are among a list of ten financial companies published by Texas as subject to potential divestment for boycotting energy companies.
The move comes amid an anti-ESG push by politicians in Republican-leaning states, and as fossil fuel-focused economies face growing pressure from the prospect of a long-term transition towards cleaner and renewable sources of energy. Texas is the largest net energy supplier in the U.S., providing nearly a quarter of the country’s domestically produced energy, and accounting for over 40% of the nation’s crude oil proved reserves and production, according to the U.S. Energy Information Administration (EIA).
In a statement announcing the release of the list, Texas Comptroller Glenn Hegar claimed that the move did not constitute “a review of the entire ESG movement,” although criteria for inclusion on the list included the companies’ ESG scores (with higher scoring companies more likely to be added), and the Comptroller argued that ESG-focused investors may be working against the interests of their clients to support a political agenda.
Hegar said:
“The environmental, social and corporate governance (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.”
The full list of financial companies cited by Texas include BlackRock, BNP Paribas, Credit Suisse, Danske Bank, Jupiter Fund Management, Nordea Bank, Schroders, Svenska Handelsbanken, Swedbank and UBS. The state also published a list of 350 individual funds subject to the same provisions, including those provided by Fidelity, Vanguard, HSBC, and JPMorgan, among several others.
See related article: BlackRock, Temasek, Quantum Energy Partners Invest $60 Million into Carbon Direct
The Comptroller’s office outlined the methodology used to develop its list of “Financial Companies that Boycott Energy Companies.” According to a FAQ provided by the state, companies were screened based on scoring “higher than their peer group with respect to MSCI ESG Ratings,” and pledges made to climate advocacy group Climate Action 100+ and the Net Zero Banking Alliance or Net Zero Asset Managers Initiative.
Hegar noted a specific focus on the stewardship activities of the investment companies in the as he investigates “how these firms may be boycotting energy companies,” adding:
“I am particularly interested in the misguided activism surrounding proxy voting. Some of these firms may be using investments essentially owned by Texas to directly push shareholder initiatives that run contrary to the interests of our state.”
ESG Today contacted several of the financial companies included on the list, each of which strongly disagreed with the claim that they boycott energy companies. In a statement provided by BlackRock, the company pointed out that it invests over $100 billion in Texas energy companies. BlackRock added:
“Elected and appointed public officials have a duty to act in the best interests of the people they serve. Politicizing state pension funds, restricting access to investments, and impacting the financial returns of retirees, is not consistent with that duty.”
Credit Suisse said:
“As we noted in our response to the Texas Comptroller, Credit Suisse is not boycotting the energy sector as the bank has ongoing partnerships and strong client relationships in the energy sector. We look forward to engaging with the Texas Comptroller to resolve this matter.”
UBS said:
“We firmly disagree with the Comptroller’s decision to include UBS in this list. We provided their office with extensive information on our policies and practices, demonstrating that UBS does not boycott energy companies even under a broad interpretation of Texas law.”
Source: ESG Telegraph