A group of state treasurers and financial officers from 21 U.S. states* has sent a series of letters to the CEOs of several major investment firms including BlackRock, JPMorgan Chase, Goldman Sachs, and others,** warning the firms against embedding sustainability and climate considerations – or even the EU’s CSRD regulation – in their investment strategies and engagement and proxy activities.

In the letters, the state officials expressed “deep concern about the erosion of traditional fiduciary duty in American capital markets,” and claimed that the integration by asset managers of sustainability factors in recent years reflects a pursuit of ideological objectives “under the banner of so-called ‘long-term risk mitigation.’”

The letters form the latest in a long series of anti-ESG moves by U.S. politicians, which has gained further momentum since the election of President Trump, which has resulted in divestments from asset managers participating in climate-focused coalitions, lawsuits against firms accusing them of using climate factors to manipulate markets, and other legal actions aimed at pushing firms away from environmental and social-focused investment policies.

While the letter acknowledges “encouraging steps” that some firms have taken, such  as withdrawing from climate coalitions, “scaling back ESG rhetoric,” and proxy voting changes, it adds that “more work must be done,” and spells out a series of commitments requested from “financial institutions wishing to compete for our states’ business”, including abandoning the use of treating “deterministic future outcomes,” such as climate change, as a long-term risk factor to justify engagement and proxy voting actions.

The letters state:

“Climate change is a common example of this issue, where potential risks—often uncertain and already accounted for in insurance and financial markets—are framed as certain and catastrophic to justify forcing companies to take immediate actions that may not align with their long-term business interests.”

Additional requests included in the letters include committing “not to use passive investment vehicles for activist proxy voting or corporate engagement,” abstaining from using “international political agendas” – such as net zero mandates, natural capital frameworks, or the EU’s CSRD sustainability reporting regulation – in investment strategies and engagement, ensuring that voting decisions are “aligned with shareholder value, not environmental or social goals imposed by activists,” and disclosure of participation in sustainable investment-focused groups such as Climate Action 100+, GFANZ, or PRI.

The letters added:

“We expect detailed evidence that your firm’s investment practices, proxy voting and corporate engagement behavior (which should be minimal to begin with), and institutional affiliations align with traditional fiduciary standards, as widely understood as short as ten years ago, and comply with applicable state laws.”

*signatories to the letters included state officials from Alabama, Alaska, Arizona, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, North Dakota, Oklahoma, South Carolina, Pennsylvania, Utah, West Virginia and Wyoming.

**financial institutions included Amundi, BlackRock, BNY Mellon, Capital Group, Fidelity Investments, Franklin Templeton Investments, Geode Capital Management, Goldman Sachs, Invesco, JPMorgan Chase, Legal & General, Morgan Stanley, Northern Trust, Nuveen, State Street, T. Rowe Price, Vanguard, and Wellington Management.