Texas remains doubtful of companies’ claims to withdraw from ESG commitments
Texas Comptroller Skeptical of Financial Institutions’ Claims to Withdraw from Climate Change Policies
Texas Comptroller Glenn Hegar remains skeptical of recent claims made by financial institutions that they are withdrawing from environmental, social, and governance (ESG) investing policies aimed at combating climate change. J.P. Morgan Asset Management and State Street Global Advisors recently announced their withdrawal from Climate Action 100+, an initiative focused on holding the world’s largest corporate greenhouse gas emitters accountable for climate action.
Climate Action 100+ boasts over 700 investors with $68 trillion in assets and has set a “net zero standard for oil and gas” targeting ten companies, many of which are based in Texas.
State Street cited inconsistencies between the Phase 2 requirements of Climate Action 100+ and their independent approach to proxy voting and portfolio company engagement as the reason for their withdrawal.
BlackRock Inc. also announced a scaling back of their commitment to Climate Action 100+, but transferred their membership to a subsidiary, BlackRock International Ltd.
These announcements come as Comptroller Hegar continues to add financial companies to his list of those boycotting the oil and natural gas industry through ESG policies. The list currently includes fifteen companies and 353 publicly traded investment funds, including BlackRock Inc.
Hegar has been vocal about his goal to bring transparency and honesty to the discussion around ESG investing, accusing investment firms of playing politics with the retirement money of hard-working Americans.
While Hegar welcomes the institutions distancing themselves from Climate Action 100+, he remains skeptical. He points to instances of firms providing contradictory information to different states and accuses BlackRock of attempting to shift its membership to another entity under its umbrella.
Despite the withdrawals, Hegar assures the people of Texas that he will continue to enforce the laws of the state and make listing decisions based on Texas law.
Texas’ Leadership in Oil and Natural Gas Industry
Texas is the oil and natural gas capital of the United States, breaking records in production, exports, refining outcomes, crude oil supply, and tax revenue contributions. The industry paid over $26.3 billion in tax revenue, the highest in state history.
Texas is also leading the nation in emissions reductions, with the Permian Basin reaching record low methane intensity while achieving record production levels. The industry has reduced methane emissions intensity by nearly 85% between 2011 and 2022.
Todd Staples, president of the Texas Oil & Gas Association, emphasizes the commitment of American producers to safety and environmental protection, stating that industry-led initiatives are making significant strides in reducing emissions and achieving environmental gains.
How do financial institutions’ withdrawal from Climate Action 100+ initiatives impact progress in combating climate change?
F its involvement in Climate Action 100+. Hegar and his office have raised concerns regarding the motives behind these withdrawals, suggesting that financial institutions may be reneging on their commitment to addressing climate change in order to satisfy stakeholders who are skeptical of the ESG movement.
Hegar acknowledges the importance of financial institutions in advancing climate action and believes that their withdrawal from such initiatives could hinder progress in combating climate change. He argues that these institutions play a crucial role in directing capital towards sustainable investments and pushing companies to adopt environmentally friendly practices.
The skepticism arises from the fact that many of these financial institutions have previously professed their dedication to ESG investing and climate action. The sudden withdrawal raises questions about the authenticity of their earlier commitment and whether they are caving in to pressure from investors who prioritize short-term financial gains over long-term sustainability.
Hegar stresses the need for financial institutions to remain committed to climate action, citing the adverse impacts of climate change on the economy and the overall well-being of society. He believes that Texas, being one of the largest contributors to greenhouse gas emissions in the US, should take a lead role in addressing climate change and not shy away from it.
Additionally, Hegar criticizes the lack of transparency surrounding the decision-making process of these institutions. He calls for greater accountability and disclosure regarding the factors that led to their withdrawal from Climate Action 100+. Understanding the reasoning behind these decisions would provide valuable insight into the motivations and priorities of these financial institutions.
The Comptroller also emphasizes the importance of collaboration and dialogue between financial institutions, investors, and policymakers. He believes that by working together, they can devise effective strategies to transition towards a greener economy while ensuring financial stability.
Hegar’s skepticism reflects a growing concern among proponents of climate action. While financial institutions may have legitimate reasons for withdrawing from certain initiatives, there is a need for transparency and accountability to maintain trust and momentum in the fight against climate change.
In conclusion, Texas Comptroller Glenn Hegar remains skeptical of financial institutions’ claims to withdraw from climate change policies. He stresses the importance of their role in advancing climate action and advocates for transparency, accountability, and continued commitment to addressing climate change. As the debate around ESG investing and climate action continues, it is crucial for financial institutions to demonstrate their dedication to long-term sustainability and not succumb to short-term pressures.
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