Texas Employees Retirement System, Austin, has come under fire from Texas Lt. Gov. Dan Patrick and the Texas Public Policy Foundation, because the $34.9 billion pension fund voted in favor of four proxy votes asking Bank of America, Citigroup, Goldman Sachs and Wells Fargo to stop providing financing for new fossil fuel projects.
The votes took place during the banks' annual meetings last week.
The proxy proposals were introduced by money managers Trillium Asset Management (Bank of America); Harrington Investments and Boston Asset Management (Citigroup); and Sierra Club, an environmental group (Goldman Sachs and Wells Fargo).
None of the net-zero proposals was approved.
On Monday, Mr. Patrick said in a statement that he is "outraged" that Texas ERS' proxy votes go against the spirit of the state's recent law that bars state agencies, including state pension funds, from investing with money managers that divest from fossil fuel companies.
"Moving forward, ERS has pledged to review and modify its voting policies to address my concerns," Mr. Patrick said.
The Texas Public Policy Foundation said in a news release Monday: "ERS has a strict policy against supporting measures that endorse social policy and are unrelated to improving financial returns for its beneficiaries."
"By adopting a proposal to prohibit investment in fossil fuels, ERS is violating its own rule to consider only what will protect and improve the economic value of the fund," said Jason Isaac, director of the foundation's Life Powered initiative, in the news release.
ERS spokeswoman Mary Jane Wardlow said in an email that the pension fund became "aware of the issue late last week and were in contact with our proxy advisor, Institutional Shareholder Services, to resolve the matter going forward."
Ms. Wardlow said ISS "cast the votes within the guidelines of agency policy. It appears there may have been some disconnect between intent and edits to the policy that were made several years ago."
She added that ERS CIO David T. Veal, who joined the pension fund last fall, "had already identified the proxy voting process as an area that needed to be examined and has formed a committee to review it regularly and make recommendations for improvement."
