Last week, the Texas Comptroller Glenn Heger came out with a list of 10 banks and 348 investment funds that are barred from doing business or having contracts with the state itself. Texas believes these firms’ policies are boycotting the fossil fuel industry, according to Texas Public Radio.

Senate Bill 13 was passed last year to prohibit companies and funds that, “without an ordinary business activity,” are boycotting the fossil fuel industry.

The firms listed are: BLACKROCK, INC, BNP PARIBAS SA, CREDIT SUISSE GROUP AG, DANSKE BANK A/S, JUPITER FUND MANAGEMENT PLC, NORDEA BANK ABP, SCHRODERS PLC, SVENSKA HANDELSBANKEN AB, SWEDBANK AB, UBS GROUP AG, according to the Texas Comptroller. The 348 investment funds come from the U.S and Europe according to S&P global.

The decision comes because Texas has declared that the listed firms oppose fossil fuels. “A vibrant Texas oil and gas industry is a stabilizing force in today’s economic and geopolitical environment,” Texas Comptroller Glenn Hegar said in a statement. “My greatest concern is the false narrative that has been created by the environmental crusaders in Washington, D.C., and Wall Street that our economy can completely transition away from fossil fuels, when, in fact, they will be part of our everyday life into the foreseeable future.”

    What’s more is that these blacklisted banks handle money for Texas’ pension funds. The entities listed in Senate Bill 13 are, “the Employees Retirement System of Texas, including a retirement system administered by that system; the Teacher Retirement System of Texas; the Texas Municipal Retirement System; the Texas County and District Retirement System; the Texas Emergency Services Retirement System; and the permanent school fund.” The school fund is a multi-billion dollar fund.

They all have stocks in the listed companies.

Oil and gas are the major industry in the state of Texas, which is considered the 10th largest economy in the world and oil and gas are the primary reason because of it. Texas does not want their pensions to be handled by firms that have policies that boycott its major industry: oil and gas.

This has practical and political reasons.

There are companies and investors that have implemented policies that are moving away from the fossil fuel industry, or claim to, because of climate change and what is considered an ESG score: Environmental, Social, Governance. Texas, like other Republican led states, is investigating companies that deal with them for their ESG practices.

ESG scores help investors assess the risks and sustainability of the company they are investing in. The ESG framework also keeps companies aware of their practices like pollution, waste dumping, diversity, working conditions, employee relations, corruption, political lobbying, tax strategy and so on. ESG guides investors to making sustainable investments and rates of returns.

Critics of E.S.G. However, say it is what is causing companies to push certain political agendas, such as politically correct ideals about climate change, social issues like gender and race, etc. In this case, it is about climate change and narratives that oppose the fossil fuel industry.

Texas does not want its money handled and invested based on politically correct reasons. “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,” Hegar said in a written statement.

On the practical side, if the firms that handle Texas’ retirement pensions make unprofitable decisions that are politically correct, that hurts recipients, and Texas will fire them.

On the political side, Texas might be battling company narratives against the fossil fuel industry, and ESG practices themselves by firms that handle Texas retirement money. Just because a company declares one thing to push a narrative, or to have a good ESG score, does not mean that is their reality in practice.

Major companies like BlackRock Inc., the world’s largest asset manager, have to handle money and invest it well to be at the top. They still invest billions into Texas oil and gas.

“This is not a fact-based judgment,” a spokesperson for the [BlackRock Inc.] said about the Texas Comptroller’s boycott in a written statement. “BlackRock does not boycott fossil fuels — investing over $100 billion in Texas energy companies on behalf of our clients proves that.”

As this plays out, since we are in the beginning stages of this event, it is uncertain how this will affect taxpayers and the pension funds themselves.

[Story by Jake Lehrer]