Vivek Ramaswamy is one of the foremost thorns in the side of the financial industry as the ESG debate rages on.

Between his authorship of Woke Inc. and Wall Street Journal op-eds, his appearances on Fox networks, and his high-profile letters to Apple and Chevron, Ramaswamy has cemented himself as a figurehead of the anti-ESG movement. He’s a flamethrower, arguing that corporations have veered off course to satisfy leftist causes, but who of late is centering his argument against ESG to prioritizing the capital owner.

Ramaswamy is co-founder and executive chair of Strive Asset Management, a firm offering "everyday Americans a way to invest in the stock market without mixing business with politics.” His newest initiative, launched last month, is a proxy advisory service to compete with the mainstream proxy advisory firms, Glass Lewis and Institutional Shareholder Services.

This interview has been edited and condensed for clarity.

Why did you launch this proxy advisory service?

We launched Strive and the asset management business last year to compete with larger asset managers like BlackRock, State Street and Vanguard, principally on differing our approach to shareholder engagement and proxy voting. Strive’s difference was to mandate companies to focus exclusively on delivering excellent products and services to your customer to maximize long run value without regard to any other social, political, environmental or non-pecuniary objectives.

Our core differentiation when it comes to asset management was our voice of vote. We have a different approach to proxy voting compared to ISS and Glass Lewis when it comes to ESG-linked issues. But second, we are also an engaged shareholder because we’re an asset manager. So what we did was we created this new line of outsourced shareholder engagement to give prospective clients the ability to at least vote their proxies and eventually also throw their shareholder voice behind the engagements we’re bringing to the table.

Are big asset managers not in the business of maximizing long-term returns?

I think that they’re in the business of voting proxies and engaging with companies with mixed motives, meaning with the objective of yes, maximizing return, but also constrained by certain non-pecuniary objectives.

All of them have made commitments to not just vote shares on behalf of the subset of clients who want them to advance these non-pecuniary objectives, but they’ve made firm-wide commitments that require them to vote with the full weight of all of their clients’ capital underwriting it.

Trying to be everything to everyone means that you end up as being nothing to anyone. They made certain commitments to appease certain large important clients but also broad stakeholder groups and interests, that were incompatible with having a sole motivation of maximizing long-run value.

If you’re a capital owner, and you look to advance an environmental or social objective with it, it’s a free country. You should totally be free to do that. But the problem is when you do that with other people’s money without their knowledge or consent. I’m not one of these people that wants to just keep the debate alive because it’s a fun debate. I’d rather us solve this debate so we can all move on to solving other problems in the world.

Do you worry that this anti-ESG movement is veering off into a world that you’re not comfortable with?

I worry about it on three counts – one is that companies might be less effective at realizing their own mission if they’re distracted by other social agendas.

I worry about it more so in the sense that it creates deep-seated mistrust in the economy as a whole when you tell citizens that your voice no longer matters in settling these important questions, like how to address climate change or racial injustice.

And then the third thing I worry about is that I actually think that an apolitical private sector is part of what gives us our best shot at unity and coherence in an otherwise divided body politic.

The approach I favor is restoring honesty and integrity in the system to say that first of all we care about preserving that apolitical sphere. And to the extent that the actual owner of the capital itself wanted to advance a particular objective, they’re free to do that. But true pluralism means we have a plurality of voices. We can solve this problem through disclosure and consent.

You said you want America's financial firms to adhere to their fiduciary duty. Part of that duty would be to consider all forms of material risk. Do you not consider environmental, social and governance factors to be material risks? 

Of course you need to take all material risk factors into account. We already had a regime for doing that. We have materiality standards for disclosure. So by definition, if you have a more methodical disclosure standard, you believe that that disclosure was only required because the prior rules weren’t capturing that.

When you create a set of categories that operates under a three-letter acronym, it has an unintended consequence of downplaying other forms of disclosure and other forms of risk that I believe investors are underweighting.

Certain states are barring certain entities from looking at certain risks. Do you see irony in this, saying we need to look at all risks and then barring firms from considering certain risk factors? 

These are nuanced issues, where there’s many different perspectives. I’ve been very clear about mine. You need affirmative consent from capital owners. And that’s where I’m focused. I’m focused on the fiduciary gap between what asset allocators and asset managers are doing with other people’s money.

That’s what I think needs to be fixed. And I’m working to guide this debate to closure, rather than throw kerosene on it. Though for the last couple of years highlighting this problem unapologetically and without hesitation was important to getting to this place.

How are you defining success for the proxy advisory services?

We define success collectively for Strive as driving changes in corporate behavior that are in the direction of reflecting our pro-fiduciary and pro-excellence perspective.

We bring weight to the table through the funds we manage, and we hope to bring added weight to the table through the vote that we are helping guide despite the fact that we don’t manage those underlying funds. And together, that gives Strive a greater weight in shareholder engagement and proxy voting to drive corporate change. That’s the goal.

We’re seeing investors increasingly demand climate and ESG-related information. Do you see this trend? 

When BlackRock and State Street say their clients are demanding it, they’re not entirely wrong about that. But then, what these bigger clients ended up also demanding is these asset managers to make firm-wide commitments, not just with their own money but with all clients’ money. What effectively happened both informally and formally was a dragging-along effect where a lot of other smaller actors, they got dragged along for the ride without knowing they were getting dragged along.

Part of what we’re seeing is a reactionary impulse to rectify that. Now that that’s happened, I think that that’s surfaced a really important debate that otherwise would not have surfaced.

Is there a market out there for these proxy advising services that you’re launching?

We’ll find out. It would seem that there are a lot of investors who do not want their capital to be politicized. And this was an easy enough way for us to also offer that as a service rather than as an asset manager.

I’m also very careful in making sure that we don’t make proxy voting the end-all-be-all. That’s not really where most of the influence is. Most of the influence is in shareholder engagement. I’m not a believer in silver bullets to complex problems. I’m a believer in a plethora of possible solutions.

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