BlackRock’s Fink Strikes Truce With Texas

After the Lone Star State blacklisted the asset manager over a fossil fuels issue, the firm’s ESG-minded CEO offers big bucks to improve the state's power grid.

Amid the ongoing culture wars, BlackRock Inc. appears to have dialed back some red-state enmity over energy and is even doing new business in the epicenter of anti-ESG sentiment, Texas. Even if the Texas initiative is only a fraction of BlackRock’s business profile, that marks a contrast from its climate-reverencing image.

BlackRock has been a years-long backer of environmental, social and governance precepts, sponsoring several clean energy funds and in 2021 whittling down its exposure to oil and gas stocks nationwide by around 15% to $552 billion, per Standard & Poor’s.

So in 2022, Texas Comptroller Glenn Hegar barred state entities, such as pension funds, from investing with BlackRock and others Hegar accused of “boycotting” the oil and gas sector. Other states, such as Missouri, followed suit.

Since the Texas blacklisting, though, BlackRock CEO Larry Fink has made overtures to the state’s officialdom. He and the firm have repeatedly made the point that BlackRock continues to invest in fossil fuels and vowed even more for the sector in Texas.

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He met twice with Texas Lieutenant Governor Dan Patrick, who last week applauded BlackRock’s plan to help raise $10 billion in private investment to bolster the state’s troubled power grid. The power-grid fund, approved by a voter referendum last fall, would aid public utilities’ construction of new power plants, including natural gas plants—i.e., those that are fossil fuel-driven.

“I told the lieutenant governor about some of the work we’d done,” Fink told an energy investment conference in Houston, pointing to BlackRock’s fundraising efforts to re-build Maui’s power grid following 2023’s devastating wildfires in Hawaii.

Patrick replied in friendly fashion, telling the conference, “BlackRock has been a big investor in the fossil fuel industry, but it wasn’t the perception,” Patrick said. “I don’t know what I expected from the king of Wall Street, but we kind of hit it off immediately.”

Fink said Blackrock already has $125 billion invested in Texas-based energy companies, and it has been investing in Texas, generally, since his firm’s 1988 founding. Fink also has noted that he has ceased using the term “ESG,” as it has become politically “weaponized.”

It’s unclear how BlackRock’s total energy holdings have change over the past three years, but the company’s many exchange-traded funds offer all types of allocations. BlackRock, known for its ETFs, does have an energy offering, the iShares U.S. Energy ETF, one of its smallest (assets: $1.2 billion), almost entirely composed of fossil fuel companies and their service providers. Its largest fund, the iShares Core S&P 500, (assets $418.4 billion) has a traditional energy allocation matching that of the index, at 3.7%.