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As a growing number of Wall Street banks and virtually all major asset managers declare their shift away from fossil fuel investments, the Texas Senate is striking back with a bill proposing that the state’s investment funds exit all companies “boycotting” oil and gas.
The Texas Tribune reports that the bill, proposed by five Republican Senators, covers state entities such as the $46-billion Texas Permanent School Fund, the Teacher Retirement System of Texas, and the Texas Municipal Retirement System of Texas. Both of these have some $31 billion under management.
If passed, all these entities and more will be obliged to exit companies that “refuse to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations with a company” because this company is involved in oil exploration and production.
The bill also makes a provision that no business or individual could sue the state entities for divesting from companies that refuse to invest in the fossil fuel industry.
Already six of the largest U.S. lenders have made official commitments to work towards accomplishing the goals set in the Paris Agreement on Climate Change. These commitments essentially come down to the banks saying they would aim to become net-zero in terms of the projects they finance over a certain period of time.
This means huge divestments from oil and gas may be on the way, which has naturally raised oil and gas hackles. The banks are hazy on the details generally. There is talk about curbing exposure to oil and gas and boosting exposure to clean energy projects, but some feel that this is not enough, and Wall Street should pledge a full exit from oil and gas.
According to Lieutenant Governor Dan Patrick, the bill, which also includes a stipulation for forced divestment, should pass easily.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.