The demands laid out by Mr. Hegar increase pressure on state agencies that manage hundreds of billions of dollars in assets to completely cut off the firms on the boycott list. While the state firms indicated they didn't own direct stakes in the financial companies, Hegar said that an examination of their holdings and business relationships showed some still had investment funds issued by the companies or were paying the firms for services such as analytics or risk management.
His findings indicate some uncertainty about what exactly is required to comply with the law, which carves out exceptions for some private-equity investments and allows the state funds to seek an exemption if severing the ties would violate their fiduciary duty to pensioners.
"We can play all the nuances we want — that keeps the lawyers in their job," Mr. Hegar, a Republican serving his third term, said in an interview. "But the simple matter is that entities that boycott oil and gas should not be doing business with the state of Texas."
Bloomberg reported Wednesday that the Teacher Retirement System of Texas uses BlackRock to manage about $4 billion of its assets — or about 2.2% of the $179.7 billion total. A TRS spokesman said then that the money manager was following state law about the proper divestments.
Texas is at the forefront of a national movement in GOP-led states to banish what's known as ESG investing, which takes environmental, social and governance concerns into account, rather than simply the potential for profit. Florida Governor Ron DeSantis and Texas Governor Greg Abbott have seemed to be in a competition to see who can take the most drastic action.
BlackRock and its Chief Executive Officer Larry Fink have been a particular focus. The financial firms, for their part, say they absolutely do not boycott fossil fuels and in some cases are large holders in oil and gas companies via their funds. They say the sustainable-investment offerings are in response to demand from clients and that they also offer many investment options that don't incorporate any type of ESG screening.
The companies listed as energy boycotters "should not be permitted to benefit from assets invested for the future of Texans while simultaneously undermining our state's economic future," Mr. Hegar, who political observers say may seek higher office after his current term expires, said in the letters. He "strongly" encourages them to "explore alternatives and invest with a new partner that does not boycott energy companies."
BlackRock is mentioned in five of the letters — those that went to the Texas Municipal Retirement System, the Employees Retirement System of Texas, the Texas Emergency Services Retirement System, the Teacher Retirement System of Texas and the Texas Permanent School Fund. The sixth letter, to the Texas County & District Retirement System, mentioned its relationships with UBS and Credit Suisse Group AG.
BlackRock, UBS and Credit Suisse declined to comment, as did the Employees Retirement System and Teacher Retirement System. The four other Texas investment entities didn't respond to emails and phone calls seeking comment.
Mr. Hegar requested a response from the state entities about their investments with the listed firms, but didn't give a timeline for doing so. He says he needs a detailed understanding of their positions and while his office lacks enforcement powers, he expects legislators will hold hearings on the issue and will make sure firms are following the law.
"I don't have the ability to force someone to divest, but I do have the ability to make them be transparent," Mr. Hegar said in the interview.