State Treasurer Advocates for Fiduciary Duty Amid Rising ESG and DEI Concerns

EXCLUSIVE

Republican state financial officers are increasingly taking a stand against diversity, equity, and inclusion (DEI) principles, along with environmental, social, and governance (ESG) criteria. In a conversation with Fox News Digital, Utah State Treasurer Marlo Oaks emphasized the need for meritocracy and fiduciary responsibility in financial management.

Oaks articulated that using ESG as a framework for investment decisions can lead to conflicts with the fiduciary standards that financial officers are bound to uphold. He stated, “ESG introduces another motive or another motivation to address societal issues through the capital markets or through investment. When you do that, you violate the fiduciary standards that all of us as financial officers are committed to.” This statement was made during the State Financial Officers Foundation conference in Orlando, Florida.

Oaks highlighted the dual obligations faced by state financial officers. Managing funds for others means prioritizing their financial welfare, unlike individuals or families who can make personal investment choices. He noted, “If a single person wants to do it or a family wants to invest their money that way, that’s their choice. But when you are managing money for other people, we don’t have that choice. We have an obligation to do what’s in their financial best interest.”

As a prominent figure in the opposition against ESG investing, Oaks has contributed significantly to the discourse around the topic, authoring numerous letters addressing its potential pitfalls.

Furthermore, state treasurers like Oaks believe their role requires unwavering dedication to the financial interests of individuals dependent on state pensions. He asserted, “When you talk about managing money for the benefit of other people, which is what a lot of state treasurers do, we have a fiduciary duty to act in the best interest of the beneficiary.” He elaborated on the dual responsibilities that include both duty of loyalty and duty of care.

In practical terms, Oaks noted how first responders and educators relying on state pensions could suffer financially if investments drift away from solid financial principles in favor of social agendas. “They are depending on this money for their retirement, and so it is our financial obligation or fiduciary obligation to act in their best interests,” he reiterated.

Oaks expressed concern that when investment decisions are influenced by ESG agendas, it can harm individuals relying on these investments for their futures.

Notably, Oaks is not alone in this fight against DEI initiatives. At the State Financial Officers Foundation conference, he and other Republican officials voiced their opposition to DEI measures and acknowledged Donald Trump’s efforts to dismantle such policies in government.

Oaks pointed out the close relationship between ESG and DEI, suggesting that his resistance to DEI stems from a desire to prioritize shareholder interests. “DEI, which stands for diversity, equity, and inclusion, is really the ‘S’ portion, referring to the social aspect of ESG. A lot of advocacy within financial markets aims to promote an agenda within corporate America, pushing policies that may not align with the best interests of companies. Companies must uphold their fiduciary obligations to their shareholders,” he stated.

He also warned that implementing DEI frameworks can lead to altered hiring practices, indicating that these changes may favor candidates based on social considerations over merit. Ultimately, this shift can negatively impact the financial performance of firms, which, in turn, affects the public servants and educators striving for adequate retirements.

Recently, Oaks was among a coalition of state financial officers who raised concerns in a letter sent to the U.S. Securities and Exchange Commission, asset managers, and public companies. In this correspondence, they articulated the financial risks posed by prioritizing political agendas, such as DEI, over financial returns. Oaks expressed intentions to safeguard investors against such threats, indicating, “When DEI is introduced at the state financial officer level, we are potentially introducing financial harm.”

He reflected on recent examples of companies whose decisions guided by social responsibility rather than shareholder returns have led to adverse outcomes. He cited companies like Target and Bud Light, which adopted policies that did not align with the financial best interests of shareholders. “They have harmed shareholder value, and that ultimately harms the financial outcomes that these hardworking public servants and teachers, et cetera, have worked so hard to secure for their retirement,” Oaks stated.

The emerging debate over ESG and DEI will likely persist as state financial officers continue to grapple with the balance between social responsibility and the ethical duty to service stakeholders’ financial interests. The conversations happening now may shape the future landscape of investment practices across various sectors.

Fox News Digital’s Deirdre Heavey contributed to this report.