Louisiana State Treasurer John Fleming, M.D., joined by financial officers from 20 other states, called on the CEOs of the nation’s largest financial institutions to end their “woke” environmental investment programs.
In a joint letter sent this week, Dr. Fleming and his colleagues from the State Financial Officers Foundation (SFOF) are asking asset managers from 27 of the nation’s largest firms to focus on the basics of financial returns and remove politics from investment decisions.
Over the past few years, many firms that manage trillions of dollars in index and retirement funds have used their power to push environmental and social governance (ESG). Dr. Fleming and his SFOF colleagues note that public servants, retirees, and taxpayers did not express their approval of this agenda.
There is plenty of evidence that financial institutions are pursuing these controversial ESG policies. For example, a recent federal court case, Spence v. American Airlines, found that American Airlines broke its duty to employees by allowing BlackRock to pursue ESG goals instead of focusing on financial returns. This case reveals how political agendas have superseded a strict focus on financial returns.
In their letter, Treasurer Fleming and his fellow SFOF officials noted, “Our responsibility is to ensure public assets are managed in the best financial interest of beneficiaries and taxpayers.”
For these financial institutions to compete for business in their states, the SFOF officials wrote, “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.”
In their letter, Dr. Fleming and his fellow SFOF officers asked asset managers to act to “reaffirm and operationalize their commitment to traditional fiduciary duty.” Here are the five specific steps that were requested:
- Stick to Real Risks, Not Speculative Scenarios. Don’t use uncertain predictions, like worst-case climate models, to justify sweeping changes to company strategies that may not help long-term financial performance.
- Respect the Purpose of Passive Investing. Passive funds like index and target-date funds are meant to track the market, not push social agendas. Leave activist voting out of it.
- Keep Global Political Goals Out of Our Investments. Investment strategies shouldn’t be shaped by international mandates like “net zero” or European sustainability rules unless they’re tied to financial value.
- Transparency About Voting and Company Engagement. Every vote cast and every corporate engagement effort should be focused on protecting or increasing shareholder value, not supporting political movements.
- Tell Us Who You’re Working With. Firms need to disclose any involvement in advocacy groups like Climate Action 100+, PRI, or GFANZ that could influence their voting or engagement with companies.
“Fiduciary duty isn’t about predicting the future or solving global issues. It’s about making sound, disciplined decisions that put our beneficiaries’ financial interests first. We’re seeing too many cases where that core responsibility is being replaced by ideology,” said Dr. Fleming.
The SFOF members asked asset managers interested in working with their states to respond to the letter by September 1, 2025, with clear proof that their investment practices are aligned with traditional fiduciary principles. While some firms have acted, there is still work that needs to be done.
According to Treasurer Fleming, “Our goal is simple: make sure the public’s money is managed with financial focus, not political motivation.”