State Comptroller Weakens TRS, Permanent School Fund by Limiting Investment Activity

Teacher retirement system of Texas outdoor sign.

This past week, Texas Comptroller Glenn Hegar announced a list of 10 companies and 348 investment funds that he declared “boycotted energy companies” and would thus be barred from doing business with any state entity. The list includes some of the biggest asset management companies in the world like BlackRock, UBS Group, and Danske Bank. 

This move prohibits any state governmental entity, including the Teacher Retirement System of Texas (TRS) pension fund and the Permanent School Fund, from investing in any of the 348 funds or any other fund operated by companies listed.

This action is a result of Senate Bill 13, which was passed last year and prohibited any state entity from doing business with companies perceived to be boycotting fossil fuel companies. SB 13 prohibits the state from doing business with companies that intend “to penalize, inflict economic harm on, or limit commercial relations with” fossil fuel companies, but the law provides no specific criteria for proving that intent. Instead, it gives authority to the comptroller to determine which companies boycott fossil fuels.

Investment firms like BlackRock and UBS Group have protested their inclusion on this list. In response to the list, a BlackRock spokesperson stated, “This is not a fact-based judgment. BlackRock does not boycott fossil fuels — investing over $100 billion in Texas energy companies on behalf of our clients proves that.” 

Texas AFT’s endorsed candidate for Texas Comptroller, Janet Dudding, called out Hegar in a statement Wednesday stating, “Comptroller Hegar is trading his fiduciary responsibility over Texas’ Trusts for political theater. Hegar’s actions clearly demonstrate Texans’ need for a change in leadership. It is time to elect a certified public accountant (CPA) as our Texas Comptroller -our state accountant- who will look out for the interests of everyday Texans instead of special interests.” 

There is no evidence that pension funds like TRS have ever or would ever invest in a fund with the intention of harming the fossil fuel industry. TRS has a duty to its members to keep the pension fund sound and healthy, but this new law prohibits TRS from investing in funds that have been proven to be profitable. TRS is one of the biggest public pension funds in the country with over $201 billion in investment assets.

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