Skip to main content
MENU
Subscribe
  • Login
  • My Account
  • Logout
  • Register For Free
  • Subscribe
  • Topics
    • Alternatives
    • Artificial Intelligence
    • CIOs
    • Consultants
    • Defined Contribution
    • ESG
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Private Credit
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • Special Reports
    • Washington
    • White Papers
  • International
    • U.K.
    • Canada
    • Europe
    • Asia
    • Australia - New Zealand
    • Middle East
    • Latin America
    • Africa
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Influential Women in Institutional Investing 2024
    • Eddy Awards
  • Resource Guides
    • Active Thematic Global Equities
    • Retirement Income
    • Fixed Income
    • Pension Risk Transfer
    • Pooled Employer Plans (PEPs)
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • ESG Rated ETFs
    • Divestment Database
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • DC Plan Design: Improving Participant Outcomes
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
  • Print
Breadcrumb
  1. Home
  2. Legislation
June 15, 2021 03:53 PM

Texas targets Wall Street in fight over ESG investing

Bloomberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Texas Gov. Greg Abbott
    Bloomberg
    Texas Gov. Greg Abbott

    Texas is drawing battle lines in a fight against investors and companies turning their backs on fossil fuels.

    Gov. Greg Abbott signed a bill into law Monday banning state investments in businesses that cut ties with the oil and gas industry. The underlying message, according to one of the most powerful energy regulators in the state, is simple: Boycott Texas, and we'll boycott you.

    The new measure is Texas' Republicans latest rebuke of ESG investing as the state clings to its status as America's crude capital. Oil and gas companies, already under pressure to funnel more cash into dividends to please shareholders, are now having to reckon with major corporations from Wall Street banks to Silicon Valley tech giants deeming climate change as a top priority when determining investments.

    Last month, Texas Railroad Commissioner Wayne Christian, a Republican, called on the Securities and Exchange Commission, U.S. President Joe Biden and Congress to issue rules regulating sustainability-focused investments so they don't discriminate against oil and gas producers. In addition to being Texas' top oil and gas regulator, the Railroad Commission is also known for being one of the industry's most ardent supporters.

    "The concerns that would arise in considering the larger universe of business development in the state, like discussion of climate change and changes in corporate practices, are all moving to the back of the line," said Jim Henson, a professor at the University of Texas at Austin who heads the Texas Politics Project. "We're not at a point where these kinds of considerations are going to outweigh partisan gestures like this."

    In reality, the new law probably won't lead to massive selling by state funds like the Teacher Retirement System of Texas or the Employees Retirement System of Texas. Thanks to a number of amendments, a fund may be able to justify holding stock in, say, Google-parent Alphabet — which won't provide AI services for oil and gas production — by demonstrating that it would be bad for its members if it was forced to sell. And if an offending company is held indirectly, like through a private equity fund, there's another exception.

    In another blow to Wall Street, Mr. Abbott also signed legislation Monday that would ban state and local governments from work with companies whose policies restrict the firearms industry. The law could hurt Bank of America and Citigroup's municipal underwriting businesses in Texas, a huge market for state and local debt deals. The banks announced policies that set restrictions on the firearms industry in 2018.

    The bills are the latest examples of the growing divide between Republican lawmakers and corporations that have taken a public stance on hot-button issues. Last month, American Airlines and Microsoft were among companies that wrote Texas leaders, urging them to "oppose any changes that would restrict eligible voters' access to the ballot" as the state worked to finalize bills that would make it harder to vote in certain areas.

    Phase out

    In late May, Mr. Abbott also signed a bill restricting cities from banning natural gas hookups in new homes and businesses, after Austin considered phasing out the use of fossil fuels as part of its climate plan.

    As corporations increasingly shun fossil fuels in an effort to combat climate change, the oil and gas industry has pointed to the robust demand for its products as evidence that boycotting its companies is hypocritical.

    Last year, the chief executive officer of a Houston-based oil-field-services firm wrote a four-page letter to the head of The North Face, after the popular outdoor-clothing brand declined to make an order of jackets with his company's logo as an employee Christmas present.

    "The irony in this statement is your jackets are made from oil and gas products the hardworking men and women of our industry produce," Adam Anderson, CEO of Innovex Downhole Solutions, wrote in a letter first reported by a local TV news station in Odessa, Texas. "I think this stance by your company is counterproductive virtue signaling, and I would appreciate you reconsidering this stance." The North Face didn't respond to a request for comment.

    Energy independence

    The state didn't always take such a combative stance toward Wall Street though. In fact, Mr. Christian cited investor concerns when the Railroad Commission said it would crack down on natural gas flaring after months of backlash against the agency's policy toward the practice. Texas has one of the worst records for flaring in the U.S., with large volumes of gas being burned in the prolific Permian Basin.

    "We cannot continue to waste this much natural gas and allow the practice of flaring to tarnish the reputation of our state's thriving energy sector to the general public and investors on Wall Street," Mr. Christian said during a commission meeting in June of last year.

    By early January, Mr. Christian began taking aim at Wall Street. In a press release, he decried "an assault from all fronts on energy independence." And in a statement last month, he said "extremists are coming after your retirement account vis-a-vis ESG investing."

    In an email, Mr. Christian said flaring "is not the existential threat to the environment it is made out to be," adding that improvements are being made to reduce the practice and that "that message needs to get out to Wall Street."

    For Senate Bill 13, the next step for the state will be to determine how it will implement a divestment directive that applies to pension funds and retirement systems that manage hundreds of billions of dollars.

    "That may include phased divestment and/or mechanisms to apply for exemptions," said Michael Sury, a senior finance lecturer at the UT's McCombs School of Business. If a state fund "is invested in a non-compliant but critical investment activity," he said, "there will likely be some process for applying for relief."

    Related Articles
    Texas Legislature passes bill against firearm divestments
    Texas bill puts state pension funds at odds with fossil-fuel divestment
    Texas Senate bill would close state pension plan to new employees
    Recommended for You
    Row of Ohio state flags.
    Ohio Retirement Study Council recommends merging state deferred comp program into Ohio PERS
    North Carolina Capitol lit up at night.
    North Carolina House passes bills to create pension board of trustees, invest in crypto
    Sponsored
    White Papers
    The State of Lifetime Income Report
    The Next Wave of LDI Evolution
    Retirement security to future income wins, TIAA brings you the latest financial…
    U.S. Public Funds Top Performers: Q2 2024
    Generative AI Investing: Opportunities at a Key Tech Inflection Point
    Research for Institutional Money Management: Advancing Physical Risk Modelling,…
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    October 23, 2023 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Custom Content
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2025. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Artificial Intelligence
      • CIOs
      • Consultants
      • Defined Contribution
      • ESG
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Private Credit
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • Special Reports
      • Washington
      • White Papers
    • International
      • U.K.
      • Canada
      • Europe
      • Asia
      • Australia - New Zealand
      • Middle East
      • Latin America
      • Africa
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Influential Women in Institutional Investing 2024
      • Eddy Awards
    • Resource Guides
      • Active Thematic Global Equities
      • Retirement Income
      • Fixed Income
      • Pension Risk Transfer
      • Pooled Employer Plans (PEPs)
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • ESG Rated ETFs
      • Divestment Database
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • DC Plan Design: Improving Participant Outcomes
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
    • Print