June 7, 2025
Texas has officially removed global asset management giant BlackRock from its financial blacklist following a strategic withdrawal by the firm from major environmental coalitions and a significant shift in its ESG (Environmental, Social, and Governance) policies. The decision, announced on June 3, 2025, marks a pivotal turn in the long-standing standoff between Texas lawmakers and investment firms seen as unsupportive of traditional energy sectors.
The move brings an end to a nearly three-year dispute that began in August 2022, when Texas accused BlackRock of “boycotting” the fossil fuel industry. BlackRock had been listed among several financial institutions under a 2021 state law that directed public entities to divest from firms perceived to be discriminating against oil and gas businesses.
This latest development reflects intensifying political and economic debates over ESG investing, which has drawn both strong support from climate advocates and backlash from conservative-led states.
Background: Texas’s Anti-ESG Legislation
In 2021, Texas passed Senate Bill 13, which required state pension funds and other public financial institutions to cut ties with companies that, in the state’s view, were boycotting fossil fuels. Under the law, the Texas Comptroller’s Office was tasked with identifying and blacklisting those firms.
BlackRock was added to that list in August 2022, a designation that restricted the firm from managing state money or engaging in contracts with Texas government agencies. At the time, Texas Comptroller Glenn Hegar accused BlackRock of waging “a campaign to deny the oil and gas industry access to capital.”
Despite BlackRock’s statements emphasizing its support for energy diversity, its affiliation with global climate alliances like the Net Zero Asset Managers initiative and Climate Action 100+ drew scrutiny from Texas officials. The tension culminated in various states initiating parallel inquiries and litigation challenging the legality and impact of ESG frameworks.
BlackRock’s Policy Shift
The tide began to turn in early 2025 when BlackRock made several high-profile exits from international climate coalitions. It withdrew from both the Net Zero Asset Managers initiative and Climate Action 100+, citing a renewed commitment to fiduciary duty and neutral investment principles.
Simultaneously, BlackRock significantly pared back the number of funds under its management that explicitly exclude investments in fossil fuel sectors. The company also began voting less frequently in support of shareholder resolutions aimed at limiting oil and gas production.
These steps were enough to convince Texas that BlackRock no longer met the threshold of a company boycotting the energy sector. In a statement, Comptroller Hegar called the policy changes “a meaningful victory for Texas,” asserting that “our actions forced a monumental shift in the way these firms approach energy investing.”
BlackRock’s Reaction and Continued Presence in Texas
In response to the removal, BlackRock welcomed the decision and highlighted its substantial financial footprint in Texas. A company spokesperson noted that BlackRock manages over $400 billion in investments in the state, encompassing infrastructure, corporate finance, and public assets.
“We are proud to support millions of Texans in retirement and investment planning,” the spokesperson said. “This outcome reflects our ongoing commitment to delivering value to our clients across all sectors, including energy.”
BlackRock maintains that it does not boycott any sector and that it remains committed to offering clients the widest range of investment choices.
Legal and Political Ramifications
Although BlackRock’s removal from the Texas blacklist resolves one facet of the ESG conflict, legal challenges remain. Texas Attorney General Ken Paxton has filed a lawsuit against BlackRock and several other asset managers, accusing them of violating antitrust laws through their collaborative ESG strategies.
The case alleges that these firms acted in concert to restrict capital flows to fossil fuel producers, thereby manipulating market behavior. BlackRock has denied the claims and vowed to defend its business practices in court.
Meanwhile, other Republican-led states such as Oklahoma and Indiana continue to blacklist BlackRock, reflecting the fragmented national landscape surrounding ESG regulation and enforcement.
Economic Impacts and Broader Debate
The battle over ESG is far from settled. Supporters argue that integrating ESG considerations helps investors manage risk and improve long-term returns. Critics, including many Texas officials, contend that ESG prioritizes social and political agendas over sound financial management.
A growing body of research suggests that the anti-ESG push may have unintended financial consequences. A report commissioned by the Texas Association of Business estimated that the state lost approximately $669 million in economic activity in fiscal years 2022 and 2023 as a result of its divestment policies.
Moreover, some economists warn that limiting access to large asset managers could reduce market efficiency and increase borrowing costs for local governments and infrastructure projects.
The Future of ESG in Public Investment
Texas’s decision to reinstate BlackRock highlights the fluid nature of ESG politics and the shifting strategies of major financial players. While the move marks a win for fossil fuel advocates, it also raises questions about the sustainability and consistency of state-level enforcement of ideological investment bans.
Observers note that many asset managers are now walking a fine line—balancing regulatory compliance in conservative states while still responding to global investor demand for responsible investment options.
Whether other states will follow Texas’s lead in reevaluating their ESG blacklists remains to be seen. What is clear, however, is that the debate over ESG will continue to evolve, with both market dynamics and political influence playing critical roles.
