The list of firms that are forbidden from doing business with certain Texas governmental entities was expanded this week. Texas state Comptroller Glenn Hegar has added an additional five companies to that divestment list. The fifteen firms on that list have been accused by Hegar of discriminating against the oil and gas industry.
Why it matters
In 2021, Texas passed a law that bars certain governmental entities from engaging in businesses accused of boycotting oil and gas companies. The oil and gas industry remains a vital component of the Texas economy. Key players in the financial sector have been accused of trying to deny lending and investment to so-called “fossil fuel” firms.
While states like New York have moved to divest from fossil fuel investment, Texas has gone in the opposite direction. Under the Lone Star State’s divestment plan, companies that seek to disengage from oil and gas investment can be denied the opportunity to manage state retirement funds. Other states like Kentucky have passed similar laws.
The five companies added this week include Rathbone Investment Management, Credit Agricole SA, Societe Generale SA, AMP Ltd., and Impax Asset Management Group. That brings the total number of companies on the divestment list to fifteen.
Hegar’s statement on the additions to the divestment list
Hagar explained his strategy in a statement on the Comptroller’s website:
“My goal has been to create a more open, honest, and transparent conversation. I wanted to end the doublespeak by so many companies and show the critical impact that fossil fuels have on our daily lives. Fostering transparent conversation in Texas and throughout our nation ultimately creates a change in behavior by financial institutions.”
According to him, the move to divest from financial firms that boycott non-renewable energy companies is having a real impact. Hegar claims that ESG (environmental, social, and governance) funds are “experiencing huge outflows and closing faster than they are opening.” He also suggests that the data confirms that funds without fossil fuel investment are underperforming.
Monday’s statement noted that the Comptroller’s review of investment funds identified roughly 350 that run afoul of the state’s law. And that could mean that Hegar’s divestment list could continue to grow in the months to come.