State Officials’ Letter to Asset Managers

Summary

Seventeen state financial officers, led by California State Controller Malia Cohen and California State Treasurer Fiona Ma, sent a letter to BlackRock CEO Larry Fink pushing back against a July 2025 letter from the State Financial Officers Foundation. The signatories argue that a correct interpretation of fiduciary duty requires active stewardship: asset owners and managers must identify and act on material, long-term risks (eg climate, governance, supply chains), exercise voting rights, and engage with large companies to protect retirees and workers.

The letter says passive oversight is inconsistent with modern long-term value creation and that barring engagement with the largest firms—which make up over 70% of US market capitalisation—would disconnect ownership from stewardship. The officials commend managers expanding proxy voting access, urge tools to link capital to oversight, and request a response and meeting by 1 September 2025. The letter is signed by 17 state treasurers, controllers and auditors.

Key Points

Seventeen state financial officers sent a collective letter urging active fiduciary stewardship to asset managers.
They reject the SFOFposition that fiduciary duty requires passivity; instead, fiduciary duty permits and requires considering material long-term risks and opportunities.
Institutional investors bear the consequences of unmanaged risks (climate, governance, supply chain) and must ensure corporate transparency and accountability.
Asset owners and managers should retain and use proxy voting rights and engage with companies to protect long-term, risk-adjusted returns.
The letter emphasises that the largest 100 firms represent over 70% of US market capitalisation, making engagement with major firms unavoidable for large investors.
Signatories commend managers expanding proxy voting and call for tools that better connect capital to oversight; they requested a response and meeting by 1 September 2025.

Context and Relevance

This letter is part of a broader debate over stewardship, fiduciary duty and the role of asset managers in addressing systemic risks. It directly challenges arguments favouring reduced engagement and could influence how public pension funds and other long-term investors direct mandates, vote proxies and demand transparency. For asset managers, corporate boards and institutional investors, the letter signals heightened expectations from state officials overseeing public retirement assets.

Author style

Punchy: this is a clear, forceful challenge from influential public financiers to the asset-management industry. If you work in investment governance, pension oversight, or corporate boardrooms, the details matter — this letter could shape stewardship practices and regulatory pressure.

Why should I read this?

Short version: state treasurers and controllers are pushing asset managers to stop hiding behind a narrow view of fiduciary duty. If you care about how long-term money gets stewarded (and whether climate, governance or supply-chain risks are actually managed), this letter tells you which way public owners want the industry to move — fast.

Source

Source: https://corpgov.law.harvard.edu/2025/09/04/state-officials-letter-to-asset-managers/