Behind BlackRock’s Texas revival

No longer blocked from doing business with the state of Texas, the New York-based investment firm BlackRock is making a big marketing push in the Lone Star State.

Why it matters: Billions of dollars are in play as BlackRock seeks to woo institutional and individual investors.

Driving the news: This month, BlackRock served as a chief sponsor of the Texas Tribune Festival, hosting panels on retirement planning, including one with its new pitchman, former University of Texas football coach Mack Brown.

Flashback: In 2022, Texas Comptroller Glenn Hegar, a Republican, barred state agencies from signing contracts with BlackRock and other firms believed to "boycott energy companies," following a 2021 law designed to protect the state's oil and gas industry.

• Lawmakers had BlackRock in their sights after company founder and CEO Larry Fink told shareholders that the firm would make climate change "a defining factor" in its investment strategy.
• At stake were many billions of dollars in investments. The chair of the State Board of Education, for example, subsequently terminated a contract with BlackRock to manage around $8.5 billion of Permanent School Fund money.

Between the lines: BlackRock executives explained that the firm actively invested in the energy industry and that the firm was a large shareholder in ConocoPhilips and Exxon Mobil.

• It had gotten on the wrong side of key Texas officials for whom terms like ESG — short for environment-social-governance, a framework to guide investing espoused by firms like BlackRock — were bad words.
• Hegar added BlackRock to the divestment list after a 2022 letter from Lt. Gov. Dan Patrick singling out the company — and Fink — of "discrimination" against Texas' oil and gas industry and of pursuing investment strategies that would "destroy" it. Gov. Greg Abbott crowed about Texas being the first state to ban BlackRock from doing state business.

What happened next: BlackRock put on a full-court marketing and lobbying effort, hiring for the first time lobbyists in Austin and beefing up its communications team.

• BlackRock got off the naughty list in June — Hegar cited its stepping back from a trade association concerned about global warming known as Climate Action 100+, among other steps it took.
• It also had made nice with Patrick, partnering with him in 2024 to host an energy investment summit in Houston. Fink and Patrick shared the stage.

Follow the money: This year, BlackRock is paying three lobbyists as much as $660,000 total, including Daniel Hodge, Gov. Greg Abbott's former chief of staff, per state lobbying records. The firm recently also hired Lauren Willis, the Austin-based former director of global communications for Walmart.

Zoom in: Now the company is trying to recapture potential Texas investors who might have been put off by its notoriety.

• Brown and former Sooners coach Barry Switzer appeared in a BlackRock ad ahead of the Red River Rivalry game in October.
• The firm is a prominent investor in the new Dallas-based Texas Stock Exchange, a competitor to Wall Street championed by Abbott.
• In June, in another step cited by Hegar, BlackRock launched a product that allows investors to earmark their cash for U.S. companies headquartered in Texas, opening access to the growing Texas economy.

What they're saying: Jaime Magyera, head of BlackRock's U.S. wealth advisory business, told Axios at Trib Fest that the company had done "a really poor job talking about what we do and how we work in the state of Texas."

• "We're now proactively telling our story," she says.

Yes, but: BlackRock remains a boogeyman for Texas Attorney General Ken Paxton.

• Late last year, he filed a suit claiming that BlackRock and other investment firms illegally colluded to reduce coal production as part of a conspiracy to fight climate change.
• This summer, a federal district judge denied the asset managers' motion to dismiss, allowing the litigation to move forward.
• "I will continue fighting to protect Texas and defend America's energy independence from this unlawful conspiracy," Paxton, who is running for U.S. Senate, said in August.

By the numbers: BlackRock has more than $400 billion invested in Texas-based public companies.

• It hasn't yet won new state contracts since getting off the list, per an Axios review of state contracting records, though some state funds remain invested with the firm due to arrangements from before it went on the list.
• The Employment Retirement System of Texas, for example, currently owns positions in two of BlackRock's exchange-traded funds, spokesperson Andrew Keese tells Axios.
• The chair of the State Board of Education did not respond to an Axios question about whether the agency plans to partner again with BlackRock to manage the Permanent School Fund.

The bottom line: Now that it's out of the doghouse, BlackRock's comms strategy could be a model for other firms and institutions trying to get on the good side of powerful politicians, from Washington to Austin.

• For now, 15 financial services firms, all based overseas, remain on the Texas energy boycott list.

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