BlackRock chairman and CEO US Larry Fink gestures as he addresses the audience, during the annual … More
The Texas state government made big news a few years back when it invoked sanctions on big institutional investor BlackRock, claiming the firm’s ESG (Environment, Social, Governance) based investing strategies unfairly discriminated against the state’s oil and gas energy sector. The sanctions were invoked related to a state law passed in 2021, during the height of the ESG investment boom.
But that movement has faded rapidly over the past year as oil and gas corporations have refocused their capital allocation strategies away from low carbon projects, which shareholders have noticed also largely proved to be low profit endeavors. BlackRock CEO Larry Fink has adjusted as well, removing the term “ESG” from his internal and external communications and tailoring BlackRock’s investment strategies to reflect current trends.
BlackRock Has A Renewed Focus On Texas
Most recently, Blackrock has made significant moves to re-engage in the Texas marketplace. Bloomberg reported in late March that Fink’s firm had filed to establish a Texas-focused exchange-traded fund (ETF) which would invest in companies headquartered in the Lone Star State. On Tuesday, BlackRock launched the iShares Texas Equity ETF (NASDAQ: TEXN) to be based off the Russell Texas Equity Index, which is designed to reflect the performance of Russell 3000 companies with Texas headquarters.
“TEXN presents a new opportunity for Texans, and investors across the country, to invest in nearly 200 companies powering the state’s economy and to capitalize on Texas’ twin engines of business and population growth,” said Joe DeVico, Head of the Americas Client Business at BlackRock.
Despite its controversies with the state’s government, BlackRock was one of the founding investors in the nascent Texas Stock Exchange (TXSE). With current plans to launch operations in 2026, TXSE has taken in over $120 million in capital from investors like BlackRock and Citadel, who see the state and its massive economy as a major growth engine for the future. TXSE plans to function as a national securities exchange and is banking on being able to obtain application approval from the U.S. Securities and Exchange Commission by the end of 2025.
In response to BlackRock’s filing for its Texas-focused ETF, James H. Lee, Chairman and CEO of the Texas Stock Exchange, posted about it on LinkedIn: “BlackRock’s plan to create a Texas ETF is a masterclass move that puts it at the forefront of two key trends. The first is the momentum behind the Texas Miracle. We’re seeing the same demand to invest in and grow Texas businesses, especially since our state is already home to more than one in 10 U.S. public companies. The second key trend is the rapidly expanding market for ETPs, which is projected to grow to more than $25 trillion over the next decade.” Lee added that he was “excited that the world’s largest institutional investor is making another bold strategic move in our great state.”
So, despite the dustups with state officials of the recent past, BlackRock maintains a large and growing presence in Texas. According to BlackRock’s Texas state spotlight, they have over $379 billion invested in Texas public companies, $134.6 billion invested in state energy, and over $14 billion invested in Texas municipal bonds on behalf of clients. In fact, BlackRock today stands one of the largest investors in Texas oil and gas.
Why Texas Is A Key Part Of BlackRock Strategy
For Fink and his management team, the motivations for such a robust presence in the state are obvious. Investing in Texas, as TEXN will promote, not only strengthens the state’s energy infrastructure but also aligns with and advances America’s rapidly evolving national energy policy objectives. Texas is the nation’s largest energy producer, accounting for 41% of national crude oil and 25% of natural gas production. The state also leads the country in both wind and solar power generation capacity, making up about 28% of U.S. wind-powered electricity.
Regardless of anyone’s personal views about the various forms of generation, all investors must recognize that grid infrastructure like transmission lines and upgrades, battery storage systems, and weatherization of critical facilities require constant injections of new capital. These rising levels of investment are crucial for maintaining grid stability and accommodating renewable energy sources and baseload generation from natural gas, coal and nuclear alike.
For Texas’s nation-leading suite of wind and solar installations, programs like the federal government’s $7 billion investment in the Solar for All program, including nearly $406 million for Texas, and the Renewable Energy Electric Generation (REEG) program in Texas, which has attracted approximately $62 billion in investments, provide major injections of such capital. The same is true of the state’s natural gas generation sector, which is again embarked on a growth path as power generators strive to meet Texas’s rapidly expanding electricity demand in the coming years.
The Future For BlackRock In Texas
In essentially every possible way, Texas stands as a pivotal player in the U.S. energy landscape. There is no question the state must be able to attract major, strategic investments to maintain and further bolster its leadership in energy production, grid reliability, and clean energy transition. BlackRock continues to invest heavily in local industries, including energy, infrastructure, and real estate because Texas offers what few other states can: low taxes, light regulation, a booming population, and thriving energy and tech sectors.
In the end, while political drama may dominate headlines, economic and energy reality drives investment decisions. Texas remains a place where business still comes first, and BlackRock, through its investment in the TXSE and establishment of its Texas-focused ETF, appears committed to both Texas and financial returns in its continuation of doing business in the state.