Texas laws targeting “ESG” perpetrators include a significant number of investment funds that do not have a true environmental, social or governance focus.
Morningstar estimates that of the 348 funds selected by Texas Comptroller Glenn Hegar, 14% do not have ESG credentials. Compiled by Bloomberg Show.
This is the latest counterintuitive moment in the unlikely battle that has pushed the once obscure finance acronym to the center of American politics. Many of the companies and funds trying to do so have been criticized by climate activists for continuing to support the fossil fuel industry.
(Bloomberg)
“The fact that many funds on the list of banned funds hold companies involved in the oil and gas industry is a sign of these concerns,” said Hortense Bioi, Morningstar’s global director of sustainability research. It calls into question the investigation conducted by the Texas State Comptroller regarding the investment.” “Obviously, these funds are not boycotting energy companies.”
The state’s position has not changed since the decision was announced last month, said Chris Bryan, director of communications for the Texas Comptroller’s Office. The test hinges not on the fund’s focus on his ESG, but on whether the fund boycotts energy companies under state law, which is more likely than just making investments in oil and gas. It’s broad, he said.
“We will actively consider whether to update the list if new information is provided about the funding, and we will do this on a regular basis,” Brian said.
Hegar blamed Wall Street and “environmentalists” in August, saying the economy “could move completely away from fossil fuels, but in fact will become part of our daily lives in the near future.” accused of creating a “false narrative”. The state targeted 348 investment funds, as well as 10 asset managers and banks, including BlackRock and Credit Suisse Group. Texas Attorney General Ken Paxton also participated in the multistate investigation, questioning Morningstar’s use of “ESG factors.”
BlackRock, which has since been criticized by Democratic states for seemingly backtracking on promises to cut its carbon emissions, said the Republican attack was the result of the company selling more than $100 billion to Texas energy companies. said it ignored the fact that it held It would therefore be “inaccurate” to accuse it of boycotting fossil fuels, BlackRock’s head of external affairs Dahlia Blas said on Sept. 7.
Applying an ESG investment approach generally involves screening for environmental, social and governance opportunities and risks. Some fund managers apply exclusion policies, while others employ so-called engagement strategies. This will continue to hold sectors such as oil and gas with the aim of helping companies adapt to a low-carbon world. ESG often faces criticism from activists for focusing too much on financial performance.
