Texas Lt. Governor Dan Patrick ‘outraged’ by state pension fund’s climate change vote

AUSTIN — A major Texas pension fund has taken a stance against fossil fuels, angering Republicans in the state who say the move defies a new law meant to prop up the oil and gas industry.

The Texas Employee Retirement System voted by proxy last week for shareholder resolutions that ask banks to limit funding for new fossil fuel projects.

It is unclear whether ERS intended to support the proposals, which ultimately failed. They have been championed by climate activists and directed against Bank of America, Citigroup, Goldman Sachs and Wells Fargo.

But the decision by ERS — which administers $35 billion on behalf of state employees and retirees — drew backlash in the GOP-led Legislature.

On Monday, Lt. Gov. Dan Patrick said he was “outraged” by the pension fund‘s actions that “go against the spirit” of the state’s new laws. Last year, lawmakers banned state agencies from working with companies that “boycott” the oil and gas industry.

“The goal of our various investment funds should be to get the best return from their funds,” said Patrick, a two-term Republican who chairs the state Senate. “If the companies they invest in take positions that hurt Texas, they have to re-evaluate those investments.”

Patrick said ERS has pledged to “review and modify” its proxy voting policies to address his concerns, but did not provide any additional details. A proxy votes on behalf of a company’s shareholder at investor meetings.

It is not clear whether ERS intended to support the resolutions on climate change.

Most proxy votes are cast in accordance with ERS policy and guidelines, according to spokeswoman Mary Jane Wardlow.

“There may have been some disconnect between the intent and the changes made several years ago,” Wardlow said in a statement. “We became aware of the issue late last week and have been in contact with our proxy advisor, Institutional Shareholder Services, to resolve the issue moving forward.”

The new state law does not address shareholder votes.

Instead, it prohibits state agencies from entering into contracts with companies that limit their activities with the fossil fuel industry. The policy also calls on pension funds, such as ERS and the Texas Retirement System, to divest from companies that cut oil and gas ties — as long as the moves don’t cause financial harm. The state comptroller’s office began compiling a list of blacklisted companies earlier this year.

Patrick prioritized the law following investors’ move away from fossil fuels. In recent years, universities, foundations and public pension funds across the country have announced plans to divest from oil, gas and coal companies in response to the growing threat of climate change.

Dolores W. Simon