Texas Schools Fund Yanks $8.5 Billion Contract With BlackRock

The Texas Permanent School Fund (PSF) has opted to terminate an $8.5 billion investment with BlackRock Inc., with one state official citing the financial asset manager’s support of environmental, social, and governance (ESG) proposals.

According to a DailyWire report, State Board of Education Chairman Aaron Kinsey said in a statement that PSF’s relationship with BlackRock was not in compliance with state legislation enacted in 2021 that prohibits state investment in companies that boycott energy companies.

Kinsey’s statement said that the PSF will not “stand idle as our financial future is attacked by Wall Street. This bold action helps ensure our PSF remains in fact permanent and will continue to support bright futures and opportunities for generations of Texas students.”

BlackRock immediately fired back with their own post on X, saying the “unilateral and arbitrary decision jeopardizes Texas schools and the families who have benefited from BlackRock’s long-term outperformance and is contrary to expert advice within Texas.”

BlackRock was one of the first companies to make ESG a priority in their financial portfolio decisions. This commitment to social concerns over profits and dividends has made it a target of conservative state governments for several years, but it is not the only criticism the financial giant has received.

A summary of the issue by the Financial Times said Tariq Fancy, the firm’s own former head of sustainable investing at BlackRock, claims that by exaggerating what can be achieved by voluntary corporate action, leading financial companies are undermining efforts towards serious government measures that could be more effective.

According to StockAnalysis, BlackRock has a market cap or net worth of $119.50 billion as of March 20, 2024. The firm’s market cap has increased by 27.11 percent in one year.

The PSF was created by Texas’ first Constitution in 1845 as a perpetual fund to support the state’s public schools and was seeded with $2 million in 1854, according to information on their website. Since that time, the PSF has grown to comprise over $53 billion in assets and distributes nearly $2.2 billion annually to Texas public schools.