Texas schools fund pulls $8.5B from BlackRock over ESG investing | Hacker News Reader

Texas schools fund pulls $8.5B from BlackRock over ESG investing

reuters.com

52 pointskamaraju43 comments

ESG was basically instantly exploited to the point of uselessness. It's kinda funny how for a little while slapping ESG on your investment product would get you a free bump, and equally funny how conservative governments completely failed to see it as nothing more than a marketing technique and ascribed far more importance to the label than anyone else ever did.

Conservative governments haven't failed to see anything. This is about optics and votes, and this will garner more for them. It's a double whammy: they can hammer the progressive ideals ESGs align with, while at the same time looking like they support local jobs/industry. A no-brainer, really.

I guess we've gotta hope China solves the problems that we can't

China is exempt from ESG.

For those that don’t live in TX, this just shows how much weight the O&G industry pulls in this state. All conservative politicians in this state are heavily funded by O&G dark money and Christian zealots.

According to this, o&g are about 1/3 of the Texas economy

https://www.statesman.com/story/news/politics/politifact/202...

Given the heavy reliance on oil and gas income, the Texas schools fund should aim to reduce exposure to oil and gas risks, due to market changes, regulations, and renewable energy trends etc solely from an investment strategy perspective.

Something isn't right here. Blackrock will do whatever their clients tell them and the largest share holders of fossil companies like Chevron, Exxon and Shell. It seems the school district is upset that Blackrock runs ESG funds as well as their index, growth, etc funds.

I'd have thought the Ideologically Pure folks over in Texas would invest/divest solely and exclusively on the basis of whether it's a good place to get returns? Even accepting their excuse that ESG investing is suffocating their oil and gas-dependent "long term financial health," that's ultimately just saying they think the government needs to more strongly place its thumb on the scales.

> that's ultimately just saying they think the government needs to more strongly place its thumb on the scales.

They have $8.5B. They've got a big enough thumb themselves.

There is an "ideologically pure" faction of the GOP that continues to oppose such measures. That faction recently backed Nikki Haley in the primaries, and the results show that this faction no longer carries the majority. There's been a reckoning on the right since the Bush debacle and a growing recognition that free market libertarianism and conservatism are actually two different ideologies.

I don't think there is long term evidence that ESG adds alpha. Even if it did in the past, there's no reason to believe it will continue once it is being gamed as it is now and the term becomes amorphous. Texas ever investing in ESG in the first place was the ideologically impure thing to do, if their only goal is performance.

That’s fine, but that’s not why they said they’re pulling their money.

Whether or not the disgruntled group controls a government - this can decide whether [unliked cause] is

worthy only of ridicule or

an imminent threat needing action

Pretty sure BlackRock doesn't care small money to them.

Blackrock probably has $8.5B hidden in the couches at HQ

I wish more people understood that Blackrock doesn’t have any much of its own money to toss around.

The ESG push is from a couple billionaires and Gavin Newsome who has basically sole discretion of California’s 500 billion pension fund.

Without Newsome and the gov of IL, ESG wouldn’t exist.

They generate pretty good fees based on their AUM.

> Without Newsome and the gov of IL, ESG wouldn’t exist.

"Without California and Illinois, a Republican would have won the presidency in 2020." Sure, but that's not the universe we live in.

That isn’t even close to the same thing. We aren’t talking about the 60,000,000 people in these states.

Just two people.

About 0.085% of AUM

Maybe a single rep cares? But not the whole company.

You're missing some zeros.

0.00085%, if my math is correct.

1% of 10T is 100B

0.1% of 10T is 10B

Ha! My math is not correct. Thank you!

What’s funny about this is that, concerns about fraud in ESG metrics aside, this will cause Texas schools to lose out on the gains from rapidly growing clean energy companies, many of which are taking advantage of the deregulated Texas power grid to get a foothold.

As Ron White once said at the Majestic Theatre in Dallas, "You Can't Fix Stupid." (decisions, in this context)

It's one thing to burn investment dollars that are your own, but to do so with educational system dollars? That is a very Texas thing to do.

https://en.wikipedia.org/wiki/Permanent_School_Fund

https://texaspsf.org/our-history/

And man does it really need fixing 8-/

Doubly ironic that TX is installing more solar/wind than almost any other state.

Triply ironic that they're attempting to claim that Blackrock is some libtard tree-hugger organization...

It's fine to take issue with your identity, belief systems, and way of life being changed forcibly by a global energy transition underway that you have no ability to stop. It's a religion, put simply. But to waste resources like this out of ideology? It's just sad.

Texas has a teacher shortage [1] and ranks as one of the most uneducated states [2]. This does no favors to those who need the educational system. And those making these decisions will be long dead while those impacted will continue to live the remainder of their lives sub-optimally from these decisions.

[1] https://www.texastribune.org/2023/12/20/texas-teacher-shorta...

[2] https://www.kxan.com/news/education/texas-is-one-of-the-most...

And [2] sure does play into the whole policy...

> this will cause Texas schools to lose out on the gains from rapidly growing clean energy companies

The existence of rapidly growing clean energy companies is only meaningful if BlackRock can reliably pick those winners in advance. A quick Google search for their clean energy funds returned two. Over the last 5 years, ICLN underperformed the S&P 500 by 50%. BECO gave negative returns. Yikes!

https://www.google.com/finance/quote/ICLN:NASDAQ?window=5Y&c...

In fairness BECO inception date was 3 Aug 2021, so under 5 years.

And the stupidity of lack of diversity.

Texas funds should be avoiding oil&gas: otherwise they are exposed to a double-whammy if the sector tanks.

0.00085% of their Assets under management. If compared to their assets under management growth from 2022 to 2023 it's just over two days of growth

A rounding error. It’s honestly terrifying how much wealth is concentrated in this one company.

This should be the top comment. Don’t forget Vangaurd and State Street too.

Virtually none of that money is in blackrock though. The money is in the companies invested in. Blackrock however does have enormous discretion in which companies get that money. But it's also not exactly opaque, these funds are pretty transparent and overall very bland.

It has the more money than most countries.

Here's to hoping it will be two weeks of growth next, then two months, then two years.

The sooner ESG mandates stop infecting companies, the better.

Edit: Yesterday you could have said they didn't care because it's only $4B, one day of growth. Today you can say $12.5B, or three days of growth. Yes, it's a trickle, but it might continue to grow.

Would you think its better to have a mandate to just set all possibly flammable resources on fire?

Mandating transitioning away from petroleum is a no brainer.

Installation of renewables is vastly cheaper, faster to market, and has the fringe benefit of not bringing about the end of our ecosystem...

We're not going to fully transition for awhile. Solar, wind, and storage are all terrific, but we'll need to keep natural gas and some amount of coal around for quite a while. It will run less and less, but will be critical when it gets really hot or cold and the wind/sun. Mandating a transition away isn't really necessary as those resources are all starting to retire anyway. It's a pretty complicated industry between the electricity markets and state/regional regulators.

Just because wind and solar are cheaper (also heavily subsidized via the IRA) doesn't mean it's all we need. They're intermittent and not dispatchable in the same way the older traditional resources were. One solution is to build a massive amount of batteries or a large DC macro grid, but even then, it won't solve all the problems and the massive projected growth in demand. Making demand more price responsive won't solve the problem either in all cases.

There's a lot of folks like NERC (in charge of reliability of the bulk electric system for the US and Canada) and MISO (a large regional organization that handles reliability on a regional level) sounding the alarm on this.

No cataclysm visited upon the entire world would be enough to fulfill your sweeping demands.

Are you sure your wishes are tantamount to a force of nature?

8.5B / 10T = 0.0085 = 0.85%

Edit: DOH! chowchowchow is right, I made pretty much the same mistake. Correction below:

8.5B / 10T = 8.5 / 10000 = 0.00085 = 0.085%

.085%. 1% of 10T is 100B. Big numbers are big.

Reply on news.ycombinator.com