Two months ago, Texas Lt. Gov. Dan Patrick sent a lengthy letter to Comptroller Glenn Hegar, directing him to include a New York-based investment management corporation on a list of companies boycotting the state's energy producers.
BlackRock, the world's largest asset manager that recently found itself widely criticized for encouraging investment in China, had run afoul of the Oil & Gas Investment Protection Act, Senate Bill 13, Patrick said in his Jan. 19 letter. SB 13 was signed into law last June.
"As you prepare the official list of companies that boycott energy companies, I ask that you include BlackRock, and any company like them, that choose to hurt Texas oil and gas energy companies by boycotting them in violation of Senate Bill 13," Patrick said in his letter. "As I have stated before, if Wall Street turns their back on Texas and our thriving oil and gas industry, then Texas will not do business with Wall Street."
Later in his letter, Patrick told Hegar that BlackRock should be "be at the top of the list."
Blackrock's push for a net-zero future, as well as the firestorm of criticism it has received over its investment strategies in China - also a high fossil fuel user - reeks of hypocrisy, Patrick said in his letter.
"These statements indicate that BlackRock is capriciously discriminating against the oil and gas industry by exiting investments solely because companies do not subscribe to a 'net zero' policy beyond what is required by law," Patrick said.
Patrick's letter came more than a month after Consumers' Research released a report under the headline "Consumer warning: BlackRock is Taking Your Money and Betting on China." The report detailed BlackRock's ties to China that began in the early 2000s and its over-cozy relationship with the country's communist leadership.
Alarm bells were being sounded about BlackRock even before Consumers' Research's major investment initiative in China. The Wall Street Journal referred to the billions invested as a "blunder" just days after the launch, saying it was a bad investment that imperiled U.S. national security.
BlackRock defended itself in a CNBC news story published two days later, saying there already is a relationship between the U.S. and China.
"The United States and China have a large and complex economic relationship," a BlackRock spokesperson said in the news story. "Total trade in goods and services between the two countries exceeded $600 billion in 2020. Through our investment activity, US-based asset managers and other financial institutions contribute to the economic interconnectedness of the world’s two largest economies."
Consumers' Research hasn't backed down. The publication's Research Executive Director Will Hild said during an interview with The Hill that BlackRock CEO Larry Fink was taking actions that '"are betraying the American consumer."
Hild indicated during the same interview that he wasn't impressed by BlackRock's insistence that it is pushing the U.S. toward green energy.
"He's not doing anything like that to the Chinese Communist Party," Hild said. "They're invested in PetroChina there and don't mess with any of their assets."
Texas isn't the only state taking issue with BlackRock since August, when the company began its new invest-in-China strategies. Florida, a heavy user of fossil fuels, is one of those states. Of all states in the nation, Florida has the second-highest amount of pension fund money, about $10 billion, invested with BlackRock, the Sunshine Sentinel reported last month.
Florida's high fossil fuel usage is well documented. The United States Energy Information Administration, using estimates from 2019, found that Florida's end use consumption by source was 0.3% from coal, 7.4% from natural gas, 60.8% from petroleum, 4.9% from renewable energy and 20.6% from electricity. Those figures exclude losses.
The United States Energy Information Administration also found that Florida's electric power sector consumption by source was 11.3% from coal, 68.2% from natural gas, 15.4% from petroleum, 4.4% from renewable energy and 15.3% from nuclear energy.
Florida consumed less energy per capita in 2019 than all but three states. The following year, Florida was the second-largest producer of electricity in the nation, behind Texas, and was fourth in the nation in total solar power generating capacity.
The Consumers' Research letter warning U.S. states about BlackRock's investments in China was sent to the 10 states with the most money from state pension funds invested in BlackRock, Florida Business Daily reported on Feb. 25. Governors in those 10 states were from both major parties. Four are Democrat governors: Jay Inslee of Washington, Kathy Hochul of New York, Steve Sisolak of Nevada and Tom Wolf of Pennsylvania. The other six were Republican governors: Ron DeSantis of Florida, Pete Ricketts of Nebraska, Henry McMaster of South Carolina, J. Kevin Stitt of Oklahoma, Greg Gianforte of Montana and Jim Justice of West Virginia.
Shortly after release of Consumers' Research report, the DeSantis administration made efforts to pull Florida's pension fund investments out of BlackRock, according to a Washington Times news story. Those efforts included a motion during a meeting with Desatis Florida's Board of Administration, Attorney General Ashley Moody and Chief Financial Officer Jimmy Patronis to "revoke all proxy voting authority that has been given to outside fund managers."
The state officials at that meeting also said they wanted to ensure fund managers "act solely in the financial interest of the state’s funds" and DeSantis decided on a survey "to determine how many assets the state has in Chinese companies."
Meanwhile, coal-dependent West Virginia took even firmer steps to separate its pension fund investing from BlackRock. In January, West Virginia State Treasurer Riley Moore announced the state's Board of Treasury Investments, manager of that state's $8 billion in operating funds, will no longer pass through BlackRock.
Moore cited two motivations for West Virginia's move away from BlackRock, for one the recent reports that the investment firm was "net zero" investments and investment strategies, according to the state treasurer. Such strategies harm coal, oil and natural gas industries. Moore also said West Virginia also dropped BlackRock over its investments in Chinese firms that pose risks and are not in the nation's best interests.
Amid all the controversy, BlackRock has not backed away from its net-zero agenda. In his lengthy letter to investors last month, Fink said businesses that don't anticipating a carbon-free future risk being left behind and that it was a focus of BlackRock to help lead the transition to "net-zero." The letter also said that "climate rise is investment risk" and BlackRock would be "exiting investments that present a high sustainability-related risk" while "launching new investment products that screen fossil fuels."