President Donald Trump wants American children to have a head start on building wealth. A group of state financial officers wants to ensure Wall Street's environmental, social, and governance (ESG) agenda doesn't get near their money.
In an October 20 letter obtained exclusively by RedState, 23 state treasurers, auditors, and comptrollers are urging the Internal Revenue Service to finalize proposed regulations that would exclude ESG-focused funds from Trump's new investment accounts for children.
The letter supports rules the Treasury Department and IRS proposed in August. Those regulations would generally limit investments to low-cost funds tracking broad American stock indexes, with annual fees capped at 0.1 percent.
The officials argue that ESG screening introduces considerations Congress never intended to influence how these accounts are invested.
The letter states:
"The principle running through them is that during the growth period a Trump account should hold broad, unfiltered exposure to the domestic equity market at the lowest available cost, with no judgment required of the account beneficiary. An index that selects or weights companies on ESG criteria departs from that principle for the same structural reason a sector index does, because inclusion turns on something other than participation in the broad market."
The analogy to sector funds is apt. Congress already decided that sector-specific indexes don't belong in these accounts — an ESG screen operates the same way, filtering companies on criteria that have nothing to do with broad market participation. A child's savings account shouldn't double as a vehicle for an asset manager's political preferences.
The Trump Accounts program provides $1,000 in federal seed money for eligible American children born between 2025 and 2028. Families can contribute additional funds, allowing the investments to grow over time.
The accounts are supposed to help children participate in America's financial markets. Adding ESG screens would give investment managers another say in which companies make the cut.
State officials also don't want to leave a convenient loophole.
Their letter specifically backs provisions excluding funds that market themselves as ESG investments. It also urges the IRS to base its final decision on how funds are structured rather than on arguments about whether ESG investments outperform traditional ones.
OJ Oleka, CEO of the State Financial Officers Foundation, wasn't particularly diplomatic.
In an exclusive statement emailed to RedState, Oleka said:
"ESG might as well stand for 'Everything Stops Growing.' The last thing we should do with children's financial security is allow it to get tangled in outdated woke activism. Trump Accounts remain a phenomenal idea by the President to set up future generations for success, and state financial officers are right to be vigilant in protecting this vital program from ESG nonsense that only threatens our kids' ability to achieve the American Dream."
Signatories include Arizona Treasurer Kimberly Yee, Kansas Treasurer Steven Johnson, Utah Treasurer Marlo Oaks, and Pennsylvania Treasurer Stacy Garrity.
Oaks, who also serves as SFOF National Chairman, added his own statement exclusively to RedState:
"State financial officers have made significant progress pushing back against investment managers who put political agendas like ESG ahead of their duty to protect the financial interests of everyday Americans. Trump Accounts offer an important opportunity to help the next generation of Americans build financial security. We support the proposed IRS regulations to protect these accounts from politically driven ESG investment criteria. The principle is simple: the money in these accounts belongs to American children and must be managed solely in their financial best interests, not to advance someone else's political agenda."
The officials also want clarification on what happens if an investment fund changes its ESG marketing after being approved. They are asking the IRS to require clearer disclosures that identify default investments and explain how parents can choose another eligible fund.
Those details matter when families may leave money invested for years without actively managing it.
The October 20 letter arrives on the IRS deadline for public comments. The agency has yet to finalize the restrictions.
Trump's program gives children an opportunity to own a piece of the American economy before they're old enough to understand the stock market. Keeping political investment criteria out of those accounts seems like a sensible place to start.