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The Texas House on Monday gave preliminary approval to a bill that would direct state investment funds to divest from companies that cut ties with fossil fuel companies.
Senate Bill 13 was approved on second reading in the House, and needs only a third reading before it is sent to Gov. Greg Abbott’s desk.
The legislation would require state entities — including state pension funds and Texas’ massive K-12 school endowment — to divest from companies that refuse to invest in or do business with fossil fuel-based energy companies.
It’s a response to the sentiment on Wall Street that oil and gas companies are contributing to climate change — and may not be a good investment in the midst of an energy transition. The bill seeks to divest the state’s massive investment funds from firms that “boycott” fossil fuel companies.
“Oil and gas is the lifeblood of the Texas economy,” state Rep. Phil King, R-Weatherford, said on the House floor before the bill was approved in a 92-51 vote. “In the world of capital, there’s a movement to deny funds to businesses that will not sign on to extreme anti-fossil fuel policy.”
Pressure is increasing on Wall Street for companies and investment funds to reduce financial support for oil and gas companies due to the outsized impact the industry has on carbon emissions that contribute to climate change. Last year, Larry Fink, founder and chief executive of BlackRock, one of the world’s largest investment companies, wrote to shareholders that the firm would make climate change “a defining factor” in its investment strategy.