The rise of new conservative political figures like Vivek Ramaswamy has raised concerns over how ESG investing may come under fire in a second Trump administration.
Two-and-a-half years after Ramaswamy launched his investment firm Strive Asset Management, President-elect Donald Trump tapped Ramaswamy to help lead the “Department of Government Efficiency.”
“It will become, potentially, ‘The Manhattan Project’ of our time,” Trump said in a Nov. 12 statement announcing that billionaire Elon Musk and Ramaswamy will lead DOGE, an efficiency-finding agency that “will provide advice and guidance from outside of government.”
He looks forward to “Elon and Vivek making changes to the federal bureaucracy with an eye on efficiency and, at the same time, making life better for all Americans,” Trump's statement said.
Who is Ramaswamy?
Biotech entrepreneur Ramaswamy is outspoken in his opposition to the use of ESG in investment decisions by state pension funds and institutions.
As recently as Nov. 1, Ramaswamy stated: "When Strive launched in 2022, nearly every major corporation bent the knee to ESG. Just two short years later, the national environment has changed dramatically, in no small part due to Strive's efforts.”
Ramaswamy helped launch Strive as an anti-ESG, anti-woke investment firm, with a mission: “restoring the voices of everyday citizens in the American economy by leading companies to focus on excellence over politics,” according to a May 9, 2022, news release. “Strive aims to solve a fiduciary problem created by the three largest U.S. asset managers, BlackRock, Vanguard and State Street, which control over $20 trillion in assets,” the 2022 release said.
Strive built its reputation by criticizing "woke" Big 3 asset managers and now manages more than $1.8 billion in AUM. Strive accused the three asset managers of using clients’ funds to exert influence over almost every U.S. public company to advance political ideologies.
“We want iconic American brands like Disney, Coca-Cola and Exxon, and U.S. tech giants like Twitter, Facebook, Amazon and Google to deliver high-quality products that improve our lives, not controversial political ideologies that divide us,” Ramaswamy said in the 2022 news release, adding that the “Big 3 asset managers (BlackRock, Vanguard and SSGA) have fueled this polarizing new trend in corporate America."
Some red state pension funds signed on. Indiana Public Retirement System, Indianapolis, awarded a no-bid contract for up to $150,000 to Strive Advisory, a business formally launched in 2023 to disrupt what Strive has criticized as the ESG values-advancing "duopoly" of the two big proxy-advisory firms.
Mark Brnovich, former Arizona state attorney general, said of Ramaswamy: “Vivek is dedicated to eliminating fraud, waste and abuse in government. We should all salute his commitment to this most noble and enormous task.” Brnovich, who served as Arizona attorney general from 2015 to 2023, is currently a partner at Boies Schiller Flexner, according to the firm’s website.
Strive and BlackRock declined to comment. Vanguard and State Street, whose asset management business is State Street Global Advisors, did not respond to requests for comment. An effort to obtain comment from Ramaswamy was also unsuccessful. BlackRock, Vanguard, and SSGA now have $11.5 trillion, $10.1 trillion and $4.7 trillion in AUM, respectively.
Will he end ESG investing?
Questions have been raised about how Ramaswamy's appointment may affect sustainable investing and the use of environmental, social, and governance factors in investing under Trump
Dan Mistler, partner, global head of ESG services at ACA Group, a governance, risk, and compliance advisory firm for financial services, said he does not expect ESG investing and ESG concerns to subside, much less disappear, during the second Trump administration.
“Most of the ‘disappearing’ already happened over the last 12 to 24 months, so in general I think we see ESG integration being stable for the near future despite what the election may purport,” He said. “Certainly, ESG concerns, i.e., the integration of ESG risk analysis, are unlikely to disappear really ever.”
The entities pushing for integration of ESG in investment procedures today are largely LPs in Europe and ‘blue state’ LPs in the U.S., Mistler noted, “both of which are likely to continue doing so.”
However, he added, markets for ESG-labeled products in the U.S may continue to decline, but they also may continue to rise in Europe as well.
David Bahnsen, chief investment officer at The Bahnsen Group, an investment firm with more than $6 billion in assets, said the ongoing marginalization of ESG that is already well in place will continue and even accelerate. Bahnsen criticized those voices espousing the ESG movement as suffering from “intellectual incoherence” and described the movement as being marred by “political toxicity” with a “high degree of grift and self-dealing.”
Marcia A. Wagner, founder and managing partner of the Wagner Law Group, a legal firm that specializes in ERISA, said, "The position that the Trump administration takes with respect to sustainable investing protocols should have no effect upon a plan fiduciary’s decision as to the investments offered on the plan’s platform."
There is a danger that Trump sees red for ESG, said Florian Wupperfeld, CEO of LCD Ventures, a U.K.-based urban innovation company offering data-driven placemaking services and socially sustainable solutions. Trump, he noted, will be good for business but part of that has to do with deregulation and allowing the markets to determine things, “which is dangerous for social and environmental (concerns).”
SEC and greenwashing
Trump's re-election has also led to speculation about the future of the U.S. Securities and Exchange Commission.
Under Chair Gary Gensler, the SEC has slapped fines on asset managers and financial services firms for ‘greenwashing’ and failing to adhere to investment strategies purported to use ESG factors. For example, in late October, the SEC fined WisdomTree Asset Management $4 million as three of its ESG-marketed exchange-traded funds invested in companies that were involved in fossil fuels and tobacco, violating its own stated strategy to avoid such investments. WisdomTree has $112 billion in AUM.
In early November, the SEC slapped a $17.5 million fine on Invesco Advisers for “making misleading statements about the percentage of company-wide assets under management that integrated ESG factors in investment decisions. Invesco has $1.77 trillion in AUM.
Such enforcement actions will become less frequent under the new Trump regime, but more so because “asset managers over time are rooting out such instances of misstated and misleading language describing ESG procedures," Mistler said.
But Bahnsen does not think the SEC will necessarily tamp down enforcement actions.
“We do not know who will be in the SEC yet, and there does remain a large administrative and enforcement ecosystem that is not going away,” Bahnsen said. “I don’t believe the ideological leanings of Trump appointees are going to feel any differently about greenwashing. In other words, companies hiding behind ESG rhetoric and labeling as a means of generating extra fees are likely to stay in the crosshairs of regulators.”
'We've been here before'
George Spencer, senior vice president at public relations firm Gregory FCA, and a former member of the Global Impact Investing Network, a nonprofit focused on impact investing, does not think Trump’s victory and the appointment of Ramaswamy will prompt ESG-focused investors to suddenly shift to a new investment strategy.
“That said, some (investors) may be evolving the ways they talk about their work; striving to be clearer about how non-financial considerations and outcomes play into their investment decision-making,” he added. “In that way, the shake-out around ESG is likely beneficial for the industry long-term.”
Mistler said it’s hard for him to see the new administration “restricting the practice of building and selling ESG products, and certainly of integrating ESG risk procedures.” Many investors, he added, “may instead find themselves seeing continued pressure on ESG in 2025, especially if driven by what may be a crowded and competitive fundraising environment.”
Andrew Behar, CEO of shareholder advocacy and engagement group As You Sow, said regardless of the election outcome “we’ve been here before,” citing that in 2016 (when Trump was first elected) the SEC “severely restricted rules on shareholder advocacy, made responsible investing more difficult, and generally gave companies contributing to climate change and injustice a pass.”
Behar added that “in the face of what’s ahead, we know that we will need to be even more nimble and innovative in maintaining the freedom to make rational and fully informed investment decisions” and that “we will mobilize shareholders to claim their right to invest in alignment with value and their values; to create a future that includes a livable planet on which to spend their retirements.”
Ramaswamy and Trump view ESG as “another tax” from a corporate perspective, said Wupperfeld of LCD. “But investing into future generations is not always the priority but a responsibility,” he added.
