Vivek Ramaswamy, an author and the founder of Strive Asset Management, has become one of the most prominent critics of ESG investing.
He regularly punches above his weight, taking on BlackRock Inc. BLK,
That duty would be better left to politicians. Asset-management firms should focus on what their investors are paying them to do: make money.
“I think it’s important we talk with precision about what are the issues that need to be addressed in the world and separate that question from who should be responsible for driving positive change,” Ramaswamy said during a conversation with MarketWatch enterprise editor Nathan Vardi during day two of MarketWatch’s inaugural Best New Ideas in Money festival.
“Companies should focus on exclusively making great products and services
for customers and doing so for profit while leaving politics to the politicians,” he added.
ESG investing — ESG stands for environmental, social and corporate governance — has become extremely trendy over the past couple of years, as some of the most powerful figures on Wall Street, including BlackRock CEO Larry Fink, have loudly championed it as the future of investing.
But along the way, Ramaswamy believes that some proponents of ESG have embraced a false narrative: the notion that making a company more equitable and more socially responsible also boosts profits.
“There’s something fundamentally false about that argument that kind of
bastardizes the debate,” Ramaswamy said.
And firms like BlackRock, which has tremendous influence over how large public companies are managed because of its voting power, have done some of the firm’s clients, who trust it to manage their money, a disservice.
“In a certain sense they’re not wrong — some clients are demanding it. But they took other citizens for the ride by voting their proxies and voting in ways that everyday citizens might actually disagree with,” he said.
Ramaswamy said he founded Strive to offer investors a way to go against the ESG trend. The firm recently launched the Strive U.S. Energy ETF DRLL,
He told Vardi that Strive would continue to be laser focused on its ‘anti-woke’ and anti-ESG strategies.
“If you want to deliver a message to the companies you invest in…then great, Strive offers you that option,” he said. “But what we don’t want to do is be everything to everyone.”
Before moving on from the subject of investing, Ramaswamy said he’s not only concerned about ‘greenwashing’ — the practice of firms using ESG as a ruse to charge higher fees without actually delivering on sustainability-related objectives — but also about the practice of asset-management firms using investors’ money to pursue an ESG agenda without their explicit approval.
Toward the end of the discussion, talk moved away from markets, and toward the polarized state of the American body politic. Ramaswamy, who wrote a book called “Woke, Inc.,” blamed the “woke” ideology for running amok and making Americans — even wealthy Americans — reluctant to express their opinions in public.
“Part of diversity is embracing the true diversity of perspectives and defending it with integrity,” he said.
“I can’t remember a time in my adult life where there was a greater gap between what people were willing to say in public, and what people were willing to say in private,” he added.
“That is a litmus test for a Democracy…and I think we are doing abysmally on that metric.”