• BlackRock had left climate-focused organisations to revive its business in Texas.
• The global investment manager still manages over $11.6 trillion in assets, and quite literally, its business is too huge to be affected by developments in Texas.
• The CEO Larry Fink once said, "Climate risk is investment risk," which got on the nerves of conservatives and led to too much drama.

The world's largest asset manager, BlackRock, has been removed from Texas' list of companies it accuses of boycotting the fossil fuel industry following BlackRock's retreat from climate initiatives.

The asset manager had been on Texas' blacklist for around three years for boycotting the oil and gas industry, which plays a larger role in sustaining the state's economy. Now, with the company off the list, it can restart work with Texas pension funds and state investments.

The state officials recently communicated that the company left two climate-focused organisations, changed its investment approach, and now acknowledges the need for fossil fuel-based energy. This is why Texas allowed state investment funds to use BlackRock’s services again.

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Things began to flare up only four years ago when Texas, a state of vast size and diverse geography, enacted a law in 2021 that targeted financial companies seemingly avoiding investments in oil and gas.

BlackRock has consistently said that it did not intend to boycott fossil fuels and invested more than $100 billion in Texas energy companies. Yet, with the law's impact, some state funds pulled out billions of dollars invested in the company.

The blacklist has no American banks or investment firms on it but includes some European banks, including UBS and BNP Paribas, meaning BlackRock is no longer singled out in its home country.

This incident has led to a larger debate over climate-focused and responsible investing. The company's CEO, Larry Fink, had been a strong advocate for businesses considering climate risks in investment strategies and once said, “climate risk is investment risk.”

This statement has caused resentment in some conservative groups and largely oil-producing states, which subsequently led to national campaigns and new laws challenging Wall Street’s approach to ESG (Environmental, Social, and Governance) investing.

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Not just that, the asset manager has also locked horns with the Texas Attorney General in a separate legal battle. The company and other large investment managers were accused of hurting competition in the coal industry by promoting climate-friendly policies.

On the whole, BlackRock has decided to put all these controversies behind it and move forward sans climate initiatives. This decision also comes on the back of settling a comparable lawsuit in Tennessee.

However, it still faces problems in other states like Oklahoma and Indiana, where it continues to be on the blacklists of those states.

Finally, it should be noted that BlackRock’s overall business is huge; it manages over $11.6 trillion, which means that, tellingly, the losses it is making in some states are not hurting its business too badly. Still, it is leaving no stone unturned to ratchet up its image and fame in Washington and beyond.

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Source: WSJ