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BlackRock Subpoenaed by Texas Senate Panel Over ESG Issues

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These translations are done via Google Translate
A Texas Senate committee issued BlackRock Inc. a subpoena, requesting specific documents related to the world’s largest money manager’s environmental, social and governance practices and for its executives to testify.

The Committee on State Affairs asked BlackRock last month to produce documents that will help legislators discuss what impacts ESG policies may have on Texans’ retirement savings, according to a statement Wednesday. The committee also sent a request for at least one of six BlackRock executives, including Chief Executive Officer Larry Fink, to attend the Dec. 15 hearing at which legislators will review the documents.

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The subpoena is the latest escalation in a spat between Republican-led states and Wall Street’s biggest asset managers over their support of sustainable investing. Last week, Florida announced it would pull about $2 billion from BlackRock, making it the sixth state to divest from the firm. And in Texas, the asset manager is already at risk of losing out on business after it was put on the state’s divestment list for allegedly “boycotting” the oil and gas industry.

“We will not allow these firms to continue to use Texans’ money to force a narrow political agenda,” committee chair Bryan Hughes said in a statement. “They have a legal duty to put their investors’ interests first, and we intend to make sure they do.”

BlackRock has said it doesn’t boycott energy companies and has a page on its website titled “Energy investing: Setting the record straight,” where it clarifies its focus on energy investing as well as how it considers climate risk.

“We look forward to continuing our engagement with the committee to share BlackRock’s work on behalf of millions of investors,” the company’s press office said Wednesday in an emailed response to questions.

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The subpoena is part of a widening probe into the investment practices of finance firms that GOP leaders say are discriminatory and damaging to the fossil-fuel industry. In August, the committee sent letters to four firms — BlackRock, State Street Corp., Vanguard Group and Institutional Shareholder Services Inc. — asking for documents and testimony from executives related to the companies investing and consulting practices and any impacts on state pensions.

Hughes said each firm has produced documents but that BlackRock withheld some information.

“BlackRock in particular has refused to provide documents it considers internal or confidential,” Hughes said. “Accordingly, we have issued a subpoena to BlackRock for the production of additional documents the committee needs to complete its work.”

BlackRock is required to send one of its executives to appear before the Dec. 15 committee hearing and produce documents, research and any communication related to ESG practices covering the period Nov. 1, 2019, to present, according to the subpoena.

The committee also requested the presence of either Fink, President Rob Kapito, Chief Client Officer Mark McCombe, Vice Chairman Philipp Hildebrand, Global Head of Investment Stewardship Sandy Boss or Managing Director of Investment Stewardship Michelle Edkins.

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