A major battle is brewing over DEI as the fate of the free market hangs in the balance. President Trump’s recent executive orders ending the implementation of DEI have forced companies like State Street, which manages large assets related to federal employee retirement funds, to give the impression that they have ended DEI/ESG. However, a deeper dive into State Street shows the company is still likely enforcing DEI/ESG, which has resulted in a full-court press from state and federally elected Republican officials to end State Street’s DEI practices.
Last week, Senator Ted Cruz introduced significant legislation to prevent asset managers that handle federal employee retirement funds from using DEI and ESG criteria in their investment decisions. The bill primarily targets State Street, which, alongside BlackRock, manages a large portion of federal employees’ retirement funds. Senator Cruz’s statement on his recent legislation provides the large scope in which State Street controls the federal employee retirement pension market, “The retirement savings program for U.S. government employees is the Thrift Savings Plan (TSP), which holds over $1 trillion in assets and in which the core mutual funds are managed primarily by BlackRock Capital Advisers and State Street Global Advisors, which use their TSP holdings to exert proxy voting power to push ESG and DEI policies.”
State Street enjoys strong support from elected Democrats, including New York City Comptroller Brad Lander, an anti-Trump Leftist who is an ally of incoming New York City Mayor Zohran Mamdani. Lander’s role makes him the chief fiscal officer of New York City, which makes him an important ally of State Street, given his influence on Wall Street. President Trump has already signed executive orders banning DEI and ESG initiatives in federal contracting and programs. With heavyweight figures on both the right and the left deeply involved, along with State Street’s significant market influence on retirement federal employee pensions, the outcome for State Street will likely determine the future of DEI and ESG across America.
Following President Trump’s executive orders eliminating DEI/ESG from the federal government, State Street has tried to present itself as a company moving away from DEI and ESG by dissolving its dedicated diversity board. However, this move is little more than smoke and mirrors. The company’s website still features a prominent page titled “Global Inclusion and Diversity.” This webpage proudly displays statistics such as 23% racial diversity on its corporate board and 38% female representation on the board. Directly beneath those figures is an awards section highlighting State Street’s 2024 DEI and ESG honors. It’s evident that State Street’s board remains heavily influenced by DEI hiring priorities. Under these circumstances, it is difficult to trust the company’s claim that it is no longer practicing DEI.
State Street’s company leadership has also shown loyalty to the Democrat Party, another key red flag in the company’s claim that it is ending DEI/ESG. FEC records reveal that State Street Chairman and CEO Ronald P. O’Hanley is a committed Democrat donor. During the 2020 election cycle, he contributed to Joe Biden and the Democrat National Committee. In the current cycle, O’Hanley has donated to virulent Trump critic Senator Mark Warner of Virginia, one of the Senate’s most reliable deep-state allies who serves as the Vice Chair of the Senate Intel Committee. Previously, O’Hanley gave to Senator Jon Tester of Montana, whom President Trump repeatedly called a phony for pretending to support Trump policies solely to win reelection in a red state. Even more telling is O’Hanley’s official company biography, which emphasizes his expertise in “governance and social issues,” a common financial-industry euphemism for DEI and ESG leadership. It’s clear that State Street’s chairman is a staunch ideological leftist who will continue enforcing leftist policies such as DEI throughout the firm.
Republican state officials have taken notice of State Street’s continued commitment to DEI policies. The company remains on Oklahoma’s official ESG boycott list. Moreover, in March 2024, seventeen Republican state treasurers sent State Street a letter continuing to accuse it of promoting ESG and DEI in the marketplace. The letter specifically notes that State Street pressures portfolio companies to adopt diversity, equity, and inclusion (DEI) policies and asserts that “effective board oversight of a company’s long-term business strategy necessitates a diversity of perspectives, especially in terms of gender, race, and ethnicity.”
For Republicans to fully defeat DEI and ESG, coordinated action will be required between state governments and the federal government to change the practices of firms like State Street. State Republicans have stepped up to the plate; now it’s time for federally elected Republicans to join the fight by cosponsoring Senator Ted Cruz’s bill.
