By Joseph Adinolfi
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. /zigman2/quotes/207946232/composite BLK -0.57% , the world’s largest asset manager, and companies like Apple Inc. /zigman2/quotes/202934861/composite AAPL +0.99% and Walt Disney Co. /zigman2/quotes/203410047/composite DIS +0.40% with a simple message: that it’s not Wall Street’s job to save the world.
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 2 of MarketWatch’s inaugural Best New Ideas in Money Festival .
“Companies should focus on exclusively making great products and servicesfor customers and doing so for profit while leaving politics to the politicians,” he added.
ESG investing — which adds environmental, social and corporate governance to traditional criteria for investment decisions — has become extremely trendy over the past couple of years, as some of the most powerful figures on Wall Street, including BlackRock’s 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: that making a company more equitable and more socially responsible also boosts profits.
“There’s something fundamentally false about that argument that kind ofbastardizes the debate,” Ramaswamy said.
And firms like BlackRock, which has tremendous influence over how large public companies are managed because of voting power, have done some of the firm’s clients, who trust it to manage their money, a disservice, in Ramaswamy’s stated view.
“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 push against the ESG trend. The firm recently launched the Strive U.S. Energy ETF /zigman2/quotes/237549507/composite DRLL +0.07% , which attracted more than $300 million in capital in under a month, according to a report in the Financial Times.
He told MarketWatch’s 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, [and] 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 so-called greenwashing — the practice of firms using ESG as a rationale for 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 at the MarketWatch festival, talk moved away from markets and toward the polarized state of the American body politic. Ramaswamy, who wrote a book called “Woke, Inc.,” argued that “woke” ideology has run amok and made Americans — even the wealthy — 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.”