Vivek Ramaswamy, author and founder of Strive Asset Management, has become one of the most prominent critics of ESG investing.
He regularly hits past his weight and takes on BlackRock Inc. BLK.
the world’s largest wealth manager and companies such as Apple Inc. AAPL,
and Walt Disney Co. DIS,
with a simple message: It’s not Wall Street’s job to save the world.
It would be better to leave this duty to the politicians. Money management firms should focus on what their investors pay them to do: make money.
“I think it’s important that we talk about exactly what problems in the world need to be addressed and separate that question from who should be responsible for positive change,” Ramaswamy said during a conversation with MarketWatch Corporate Editor Nathan Vardi of the day two of MarketWatch’s first Best New Ideas in Money festivals.
“Companies should focus on making only great products and services
for customers and for profit, while politics is left to the politicians,” he added.
ESG investing — ESG stands for Environmental, Social and Corporate Governance — has been extremely trendy in recent years as some of the most powerful figures on Wall Street, including BlackRock CEO Larry Fink, have been vocal in championing it as the future of investing .
But as an aside, Ramaswamy believes some ESG proponents have embraced a false narrative: the idea that a company becoming fairer and more socially responsible also increases profits.
“There is something fundamentally wrong with this argument
distorts the debate,” Ramaswamy said.
And firms like BlackRock, which has tremendous influence over how large public companies are managed through its voting rights, have done a disservice to some of the firm’s clients who trust them to manage their money.
“In a way, they’re not wrong — some customers are demanding it. But they took other citizens with them by choosing their proxies and voting in ways that ordinary citizens might not agree with,” he said.
Ramaswamy said he founded Strive to offer investors a way to buck the ESG trend. The company recently launched the Strive US Energy ETF DRLL,
which attracted more than $300 million in capital in less than a month, according to a Financial Times report.
He told Vardi that Strive will remain focused on its “anti-woke” and anti-ESG strategies.
“If you want to send a message to the companies you invest in…that’s great, Strive gives you that option,” he said. “But we don’t want to be everything for everyone.”
Before veering off the subject of investing, Ramaswamy said he’s not only concerned about “greenwashing” — the practice by companies that use ESG as a ruse to charge higher fees without actually meeting sustainability-related goals — but also the practice of asset management firms using investors’ money to pursue an ESG agenda without their express consent.
Towards the end of the discussion, the conversation moved away from the markets and turned to the polarized state of the American corporation. Ramaswamy, who wrote a book called Woke, Inc., blamed the “woke” ideology for running amok and making Americans – even wealthy Americans – reluctant to speak their minds publicly.
“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 when there was a bigger gap between what people were willing to say in public and what people were willing to say in private,” he added added.
“That’s a litmus test of a democracy … and I think we’re doing miserably on that metric.”