A Texas state Senator has introduced a bill that would require the state’s pension funds to pull any investments from a company that divests or “boycotts” the fossil fuel industry.

Under the bill, any entity that divests from oil and gas companies will be put on a list prepared and maintained by the state comptroller’s office, and will be warned by the state’s various pension funds that they have 90 days to change their position before the funds “shall sell, redeem, divest, or withdraw all publicly traded securities of the company.”

Texas Lt. Gov. Dan Patrick has called the bill one of his top legislative priorities, according to the Austin American-Statesman. “Any Wall Street firm that says, ‘We are turning our back on the oil and gas industry in Texas and we will not loan them money (and) we will not invest’ — Texas is not going to give them any of our money to hold or invest,” Patrick reportedly said at a public policy forum sponsored by the Texas Business Leadership Council.

Unlike Texas, many state and local pension funds have sought to distance themselves from oil and gas companies in recent years in favor of alternative energy. Some have made the decision to do so in an effort to reduce their carbon footprint and mitigate the effects of climate change, while others have pointed to gas and oil companies’ poor return for investors.

The Lone Star State has a close relationship with the fossil fuel industry. The U.S. Energy Information Administration, a subsidiary of the U.S. Department of Energy, states Texas accounted for 41% of the country’s crude oil production in 2019.

This proposal, ironically, would commit the same kind of fiduciary mistake that it purports to avoid. Pension funds shouldn’t play politics of any kind with the money they have been entrusted to manage. Divesting or investing for political reasons goes against the fiduciary responsibility to manage public employee funds well.

All of which can means divesting from fossil fuel stocks purely for political, social, or environmental reasons would be a violation of fiduciary duty. On the flip side, divesting from fossil fuel stocks as part of an investment strategy is as acceptable as investing in those stocks would be as part of a different strategy.

This leads to the irony in the proposed legislation. Forcing the state pension funds to divest from companies that are in turn divesting from the fossil fuel industry would be a politically-driven investment decision. The state legislature is not setting the investment strategy for Texas Employees Retirement System or Texas Teachers Retirement System or any other state pension fund.

And given the state’s 76.1% funded ratio, it’s vital state leaders focus more on increasing that number, and not making a political statement.

If the reason for pension funds to avoid divesting from the fossil fuel industry is because pension funds shouldn’t play politics, then it follows that they should avoid divesting from any other kind of company for political reasons, too.