Texas Comptroller Expresses Doubt About Financial Institutions Abandoning ESG Investing
The comptroller of Texas has expressed skepticism regarding financial institutions that have recently claimed to withdraw from environmental, social, and governance (ESG) investing policies that are aimed at fighting climate change.
J.P. Morgan Asset Management and State Street Global Advisors have recently declared their withdrawal from the Climate Action 100+, an investor-led initiative aimed at compelling the world’s largest corporate greenhouse gas emitters to take essential measures to combat climate change.
Climate Action 100+ boasts a membership of over 700 investors with a staggering $68 trillion in assets. This influential group has taken a significant step forward by establishing a “net zero standard for oil and gas,” specifically targeting ten companies, many of which are based in Texas.
State Street has stated that they do not find the Phase 2 requirements of Climate Action 100+ to be in line with their independent approach to proxy voting and engaging with portfolio companies.
BlackRock Inc. has recently announced that it will be reducing its commitment to but has transferred its membership to a subsidiary, BlackRock International Ltd.
The Texas Comptroller, Glenn Hegar, has been actively adding financial companies to a growing list of those that boycott the oil and natural gas industry by implementing ESG (Environmental, Social, and Governance) policies. Currently, there are fifteen companies and 353 publicly traded investment funds on the list. Notably, Blackrock, Inc. has been on the list since August 2022.
According to Hegar, Texas has taken a leading role in exposing investment firms that manipulate the retirement funds of hardworking Americans for political purposes. She emphasizes the importance of bringing honesty and integrity to a discussion that has been characterized by one-sidedness and intellectual dishonesty.
In accordance with the divestment provisions outlined in Texas Government Code Chapter 809, the institutions listed by the comptroller must adhere to certain guidelines. These guidelines specify that a financial company, as defined by the code, refers to publicly traded entities involved in financial services, banking, or investment. As a result, state governmental entities are prohibited from investing in any of the companies or investment funds featured on the list.
In a statement on Thursday, Hegar expressed her approval of companies distancing themselves from Climate Action 100+. She sees this as a positive development and a testament to her efforts to bring more transparency to the financial sector. Hegar aims to foster an intellectually honest conversation around ESG investing and believes that the lack of transparency in this area has led to a prioritization of politics over profits and a disregard for fiduciary duty towards clients by many financial firms.
Despite his skepticism, he continues to have doubts.
In sharing his insights, he recounted the encounters his team has had while conversing with individuals in the financial sector.
“We have been informed that certain companies have been giving Texas one set of information while providing completely different and often conflicting information to states like New York or California,” Hear expressed. “Regrettably, this pattern of speaking with a forked tongue persists in their recent announcements.”
He highlighted the statement from a J.P. Morgan spokesperson who emphasized the company’s substantial investment in its investment stewardship team and engagement capabilities, as well as the creation of its own climate risk engagement framework. Additionally, he referenced BlackRock’s attempt to play a shell game by transferring its membership to another entity within the BlackRock umbrella.
He expressed his support for these announcements but made it clear that he is dedicated to upholding the laws of Texas as established by the Texas Legislature. He emphasized that the people of Texas and the lawmakers have entrusted him with the responsibility of ensuring that Texas tax dollars are not used in a way that harms the state’s economy or jeopardizes important industries and employment opportunities.
The comptroller’s staff is currently evaluating all company policies on its existing list and reviewing its listing process. He mentioned that although three of the largest money managers in the world have withdrawn from the CA100+ coalition, his team will still make listing decisions in accordance with Texas law.
Texas continues to hold its position as the leading hub for oil and natural gas in the United States. In the past year, the industry achieved remarkable milestones, setting records in various aspects such as production, exports, refining outcomes, crude oil supply, and tax revenue contribution. The state witnessed the highest production levels, the largest export numbers, and significant contributions to refining outcomes. Moreover, the industry’s tax revenue contribution reached an unprecedented amount of over $26.3 billion, marking a historic achievement for Texas.
According to reports from The Center Square, Texas is at the forefront of emissions reductions in the United States. This has been acknowledged by various organizations, including the Texas Methane & Flaring Coalition, Texans for Natural Gas, and The Environmental Partnership.
According to a report by Texan’s for Natural Gas, producers in the Permian Basin in west Texas have achieved a new milestone in 2022. They have reached a record low of methane intensity while also achieving record production levels. The analysis reveals that the industry has successfully reduced methane emissions intensity by almost 85% between 2011 and 2022.
According to Todd Staples, president of the Texas Oil & Gas Association, American producers are unparalleled in their dedication to safety and environmental protection when it comes to producing, transporting, and refining oil and natural gas. He asserts that industry-led initiatives have made significant strides in reducing emissions and achieving unprecedented environmental improvements that are unmatched globally.
“Texas is where American energy leadership begins, and we owe a debt of gratitude to the oil and natural gas companies in the Lone Star State. Their unmatched stewardship has not only benefited our nation but also our economy and the world at large.”
