Texas, Florida blacklist ESG investing

September 2, 2022

States reliant on fossil fuels have labelled ESG as 'too political'

ESG investing has been met with hostility in the state of Texas. As the largest producer of the US’s fossil fuels, accounting for over 40 per cent of its crude oil reserves, this backlash has caused significant ripples to be felt across the sector. 

Texas Comptroller Glenn Hegar has argued that ESG has birthed the growth of a system in which some financial companies are no longer working in the best interests of their clients. He added that this industry pushes a ‘social and political agenda’ which is ‘shrouded in secrecy.'  

Hegar published a blacklist of ‘Financial Companies that Boycott Energy Companies’, to be used as a guide for divestment by state pension funds in Texas. 

Like every action, Hegar has been met with an equal and opposite reaction. The major news outlet, Financial Times, highlighted the backlash from companies stating that Texas has over-politicised the ESG blacklist.  

Companies including BlackRock, Credit Suisse, and UBS have all released statements decrying the action, calling it anti-competitive. Citing the emissions created by Texas’ fossil fuels industry, BlackRock stated that ‘elected and appointed public Officials have the duty to act in the best interests of the people they serve.’  

Texas’s fiery relationship with ESG investing has come as the latest anti-ESG action in a building anti-ESG movement. Florida has also moved towards blocking funds from including ESG factors within the decision-making on investments. Taking matters further than Texas, legislation has already been approved for Florida’s state pension to disregard all ESG factors in their investment decisions. 

These stories echo ever-growing retaliation and attacks against the ESG sector. Politicians arguing that investment decisions must occur without the political influence of ESG are themselves further politicising the investment processes of fiduciaries.