The group of 15 state financial officers is targeting the benchmark policy of Institutional Shareholder Services, a massive proxy advisory firm that gives shareholders recommendations on how to vote on corporate issues. The Republican officers argued in a letter sent Thursday that ISS’s basic benchmark policy is skewed and that ISS advised votes for ESG priorities far in excess of the market.

ESG is a financial model that centers on compelling social change through investment and divestment. It is a model that does not solely look at maximizing profit but also incorporates other elements into financial decisions.

Republicans have thrust ESG into the mainstream through fights such as this one. They argue that an overt focus on ESG in making corporate decisions runs afoul of the responsibility of corporations and advisers such as ISS solely to maximize shareholder returns.

The treasurers outlined their grievances in the letter, citing a report from the conservative nonprofit group Consumers’ Research, which is known for opposing corporate ESG. The group reviewed 192 climate-related shareholder proposals that ISS’s benchmark policy appeared to recommend voting for.

The report found that just 17% of those proposals received majority support, showing that ISS’s benchmark policy was out of step with the market.

The group contends that ISS heavily favors ESG policies even when there is not a demand for them. The treasurers took umbrage to remarks from Lorraine Kelly, ISS’s global head of investments stewardship, who said during a March CNBC appearance that ISS’s benchmark was “pretty centrist.”

“These results directly conflict with your claim that your benchmark policy is ‘pretty centrist,’” the letter reads. “Rather, your benchmark policy appears to be ‘activist’ by any reasonable definition of the term, and this is highly problematic.”

The group called upon ISS to “immediately reevaluate” its benchmark policy regarding ESG. The letter was sent as part of the ISS’s annual request for feedback on its benchmark policy.

The treasurers also asked ISS to change some of its social benchmark policies for the 2025 shareholder proposal season. For instance, they said ISS’s benchmark policy includes generally voting against directors of companies that do not have women on their boards.

This is just the latest in the Republican pushback against ESG and the somewhat related concept of corporate diversity, equity, and inclusion policies.

For instance, earlier this year, West Virginia Treasurer Riley Moore announced his state was banning four more banks from state contracts over their ESG policies and “boycotts” of fossil fuel companies.

West Virginia had already placed five firms on its restricted institutions list — BlackRock, Goldman Sachs, J.P. Morgan, Morgan Stanley, and Wells Fargo. The first five firms on the list have lost access to some $18 billion in annual inflows and outflows.

In a cease-and-desist order from this year, Mississippi Secretary of State Michael Watson accused money manager BlackRock, a frequent target of anti-ESG ire, of making “fraudulent statements, omissions, and other misrepresentations” about its ESG strategies.

Also this year, Texas State Board of Education Chairman Aaron Kinsey notified BlackRock that the state was pulling some $8.5 billion in investments from it over its ESG policies.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

The group representing Republican state financial officers, the State Financial Officers Foundation, announced in late April the formation of a political arm to defend its members and push back harder against ESG.

“There has been a dramatic uptick in their state-level lobbying, and we believe that’s a direct result of the work that our members and others have done to divest because of their approach to ESG,” the group’s executive director, Noah Wall, told the Washington Examiner during an interview this year.