PJ Media BY STACEY LENNOX 8:31 PM ON DECEMBER 08, 2022
In August, the Texas Senate Committee on State Affairs requested documents from the financial firms BlackRock, State Street, Vanguard, and Institutional Shareholder Services. The State Affairs Committee is studying the investment practices of financial services firms and how those practices affect the state’s public pensions. It is responsible for ensuring the state’s public pension funds are not being invested in furthering political or social causes.
Now, Texas has issued a subpoena to BlackRock to provide documents in person for failure to produce the requested records. Representatives of the asset manager are ordered to appear on December 15, the same day the State Affairs Committee has called to convene the entire committee for a hearing. The committee requested that the “Big Three” asset managers — BlackRock, State Street Global Advisors (State Street), and Vanguard — appear. They also want to speak with Institutional Shareholder Services (ISS).
The question is whether these type of commitments violate the asset managers’ fiduciary responsibility to the Texas pension system. They are required to run their plans solely in the interest of participants and beneficiaries, not activist third parties like Net Zero. Their funds should be run for the express purpose of providing the best return with the lowest risk. And while all of these firms assert failure to address climate risk as an investment risk, it is not clear that today’s retirees are at risk if the temperature is two degrees hotter in 2100.