A group of 26 financial officers from 21 states sent letters to 18 major financial institutions this week, warning them to abandon environmental, social, and governance (ESG) practices if they wish to continue doing business with their states.
The letters said ESG has undermined the traditional fiduciary duty that firms owe their clients, focusing solely on financial return, and instead prioritizes advancing political agendas.
“Fiduciary duty has long been a critical safeguard that facilitated efficient capital allocation grounded in financial merit rather than political ideology,” the letter said. “But that clarity is being diluted under the banner of so-called ‘long-term risk mitigation,’ where speculative assumptions about the future, like climate change catastrophe, are used to justify ideological conclusions today.”
Signers include state treasurers, auditors, and comptrollers from states like Alabama, Arizona, Florida, Louisiana, Missouri, North Carolina, Pennsylvania and Utah. BlackRock CEO Larry Fink and 17 other financial leaders were recipients of the joint letter. Others include executives from Vanguard, Fidelity, JP Morgan, Goldman Sachs, and State Street.
The letter said that while some firms have started leaving global climate coalitions and reducing ESG-related proxy votes, the state financial officers want “durable assurances” that fiduciary duty, not politics, drives investment decisions.
“While some firms have recently taken encouraging steps, such as withdrawing from global climate coalitions and scaling back ESG rhetoric and proxy votes, and some states have permitted incremental reintegration, more work must be done,” the letter said. “The number one issue is a recommitment to the foundational principles of fiduciary duty, loyalty, objectivity, and financial focus.”
The move comes after Texas removed BlackRock from its blacklist earlier this month and resumed investing with the firm – a move that drew criticism from others still pushing back against ESG. The letter indicates that many states won’t follow suit.
“Financial institutions wishing to compete for our states’ business should provide durable assurances that their practices align with these principles,” the letter said. “Our responsibility is to ensure public assets are managed in the best financial interest of beneficiaries and taxpayers.”
O.J. Oleka, president of the State Financial Officers Foundation, said the states are right to demand proof that ESG is no longer a factor in investing for these companies.
“Actions always speak louder than words. Requiring America’s financial giants to prove their independence from woke ideology with concrete steps before doing business with a state’s dollars is fully necessary and just makes sense,” Oleka said. “These financial officers are doing the right thing for their states and the taxpayers whose financial security they’ve been entrusted to protect.”
Will Hild, executive director of Consumers’ Research, also praised the letter.
“BlackRock is playing a game of deceit,” Hild said. “Fink and his team are trying to say all the right things to conservatives while quietly doubling down on their activist agenda behind the scenes.”