Texas Senate Committee to Investigate Financial Asset Managers’ ESG Policies on Public Pension Investments

The Texas Senate State Affairs Committee is set to call upon some of the world’s largest financial asset managers on Thursday, with a focus on their respective Environmental, Social, and Governance (ESG) policies, according to a report from The Texan.

ESG is a movement synonymous with progressive policy on environmental and energy issues, as well as various social causes.

The committee’s task is to evaluate “the investment practices of financial services firms and how those practices affect the state’s public pensions.”

BlackRock and State Street, two of the largest portfolio-managing firms, have been summoned to the hearing, as well as Institutional Shareholder Services (ISS), the proxy vote advising firm for some of Texas’ state pension systems.

BlackRock, the most public face of the fight, is committed to a “decarbonized” energy future, but has refrained from “divesting” or “sanctioning” fossil fuel companies.

While Vanguard was initially subpoenaed, the company withdrew itself from the Net Zero Asset Managers initiative and was subsequently excused from the hearing by Committee Chairman Bryan Hughes (R-Mineola).

Texas Attorney General Ken Paxton is among 19 state attorneys general investigating BlackRock for its ESG-related statements.

The hearing tomorrow is expected to shed light on the influence of financial asset managers on the investment of Texas’ public pensions and how the ESG movement affects the direction of the energy sector, among other issues.