A coalition of 26 U.S. state financial officers has issued a stern warning to the chief executives of major financial institutions, urging them to abandon ESG investment strategies if they wish to continue doing business with their states.
In letters sent to firms including BlackRock, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Fidelity, BNY Mellon, State Street and Vanguard, the state officials demanded concrete action to demonstrate adherence to what they describe as a “traditional fiduciary model grounded in financial integrity, not political advocacy.”
The officials—largely from Republican-led states such as Alabama, Arizona, Iowa, Nebraska, Oklahoma, Pennsylvania and Utah—called on the firms to steer clear of “international political agendas” such as net-zero climate targets or the EU’s Corporate Sustainability Reporting Directive, which mandates regular disclosures on environmental and social risks.
The letter accuses financial giants of undermining fiduciary duty in favour of ideological objectives through ESG investing. “While some firms have taken encouraging steps, such as exiting global climate coalitions and reducing ESG-related rhetoric, more work remains,” the letter states.
The coalition has set a deadline of 1 September for the firms to respond and demonstrate that their investment practices, proxy voting, and corporate engagement activities align with traditional fiduciary standards.
The move follows Texas’s recent decision to remove BlackRock from its investment blacklist, a reversal that ended a nearly three-year prohibition on the asset manager’s involvement with Texas state pension and investment funds, which manage an estimated $50 billion in assets. The state had previously sanctioned BlackRock over its climate-focused policies.
Though BlackRock has scaled back some of its environmental commitments this year—including its withdrawal from the Net Zero Asset Managers initiative and the Climate Action 100+ group—it continues to face scrutiny from conservative organisations over its fossil fuel policies. A recent report by the American Energy Institute and Consumers’ Research accused the firm of maintaining investment practices that restrict fossil fuel development.
The coordinated push reflects an escalating backlash among Republican-led states against ESG-focused investment policies, which critics argue prioritise political agendas over financial returns. The financial institutions targeted have not yet publicly responded to the letters.
