We have no idea why the Wall Street Journal continues to give op-ed space to Peter Thiel-funded anti-ESG crank Vivek Ramaswamy so that he can promote his Strive Fund. We note that the Journal discloses Strive’s investments in the companies he writes about but does not make clear that he is on the other side of ESG initiatives.
Ramaswamy’s arguments are not just undisclosed self-service; they are slanted and muddled. He criticizes BlackRock as inconsistent for endorsing particular climate goals and then for taking a different position once the company has made progress toward those goals. Yet that is exactly the kind of careful, nuanced approach Ramaswamy criticizes them for not taking. He has no data to support his claims that the positions he attacks are not based on long term returns.
When I raised this point with a Chevron executive at a meeting after my shareholder letter, he suggested all the company’s decisions are about maximizing financial returns. In that case, why did the company need to be pressured into adopting certain Scope 3 emissions caps, tripling investment in “new energies,” and issuing a “climate change resilience” report supporting the Paris Agreement and a carbon tax? Why did the Dutch nonprofit that made the proposal and State Street, which voted for it, take credit for changing Chevron’s behavior?
Is he saying that insiders always make financially optimal decisions without any outside pressure? Experts in finance and economics would disagree. So would the long history of gigantic corporations collapsing because they failed to adjust to changing market conditions, including legislation. And isn’t Ramaswamy doing EXACTLY the same thing with the letters described below, urging changes in policy based on his views as an investor?
By definition any transaction is based on the two parties having different ideas of the value of whatever is being exchanged. Ramaswamy is just like a short-seller using trash talk to promote his position.
I sent shareholder letters recently to the boards of Apple, Disney and Chevron questioning their decisions to embrace environmental, social and governance agendas that don’t appear to advance business goals—including Apple’s racial-equity audit, Chevron’s Scope 3 carbon-emission targets, and Disney’s opposition to Florida’s Parental Rights in Education Act. I detailed the tangible costs to each company of adopting these policies. The most common counterargument is that ESG practices are in the “long-run interests” of stockholders. That argument is a farce.