Texas Law Takes Aim at Energy 'Discrimination'

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Texas is pushing back against the energy transition with a new law forcing some state agencies to cut ties with companies that "discriminate" against fossil fuels. Texas Senate Bill 13, filed by state Sen. Brian Birdwell, R-Granbury, along with a dozen co-sponsors, prohibits the pension funds of state employees, teachers, city workers, county staff, emergency services providers and the state’s public school endowment system from contracting with or investing in firms with policies that "boycott" oil and gas companies. Texas Gov. Greg Abbott signed the bill earlier in the week and it becomes law on Sep. 1. Birdwell said during committee hearings that the bill is a response to the growing movement by large state organizations, particularly pension funds but also institutional investors, that are moving to divest from oil and gas companies (OD Mar.18'21). That could include certain state arrangements with investment giants like BlackRock. The influential firm's leadership has declared that climate change is an investment risk and is leveraging pressure on oil and gas companies to reduce their carbon emissions (OD Mar.8'21). Fiduciary Duty Birdwell said the burgeoning "fossil fuel discrimination movement is denying capital to our responsible, hard-working energy business." "Investment and pension managers who invest based on political trends undermine their fiduciary duty and threaten out workers' and retirees' futures," he added. The actual fiscal impact of the new law on Texas state pension funds is still unclear. None said that they were able to determine the exact effects of the law, although the Employees Retirement System (ERS) acknowledged that it "could have a negative indeterminate fiscal impact to the agency's programs and operations and potentially limits the return potential of [Employees Retirement System of Texas] ERS investments." ERS is a $29 billion fund that provides insurance coverage for roughly 550,000 Texans and manages the retirement benefits of 118,000 ERS members. Birdwell has not responded to Energy Intelligence’s requests for comment. Legal Realities

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