A state pension fund is close to finalizing a contract for proxy-voting services offered by Strive Advisory, a business linked to ESG investing critic Vivek Ramaswamy who recently announced his run for U.S. president.
"It's nearly done," said Justin Danhof, head of corporate governance at Strive Asset Management, who declined to name the pension fund.
Strive Advisory and Strive Asset Management have the same parent company, Mr. Danhof said. Strive Asset Management currently offers eight exchange-traded funds with a total of about $650 million in assets under management.
Mr. Ramaswamy co-founded Strive Asset Management, a firm whose mission is "restoring the voices of everyday citizens in the American economy by leading companies to focus on excellence over politics," said a May 2022 news release announcing the launch of the firm.
A February statement from Strive regarding Mr. Ramaswamy's presidential bid said he had stepped down as Strive's executive chairman "and yielded his operational responsibilities at the company."
The launch of Strive Proxy Voting and Strive Outsourced Shareholder Engagement & Proxy Voting Consulting Services were announced Jan. 10.
The center of what Strive is trying to fix "is a corrupt proxy ballot," Mr. Danhof said.
"The vote that ends up being tabulated at the end of the day at most annual shareholder meetings is not reflective of what the actual owners of capital want," he said.
Strive launched its new services to give investors an alternative to incumbent proxy-advisory firms Institutional Shareholder Services and Glass Lewis, according to the Jan. 10 news release, which described those firms as a duopoly.
ISS and Glass Lewis guide the behavior of thousands of smaller asset managers to often advance environmental, social and governance values, "typically in lockstep with the big three asset managers BlackRock, State Street and Vanguard," the release said.
Those three asset managers have "an outsized sway in the vote," Mr. Danhof said.
"And so, they're tipping the scales with other people's money, and, again, it's not their skin in the game," he said, adding that "they're doing it with lots of state pensions."
However, a recent report by Ceres, a non-profit organization, showed State Street Corp., BlackRock and Vanguard Group near the bottom of a list of the 50 largest asset managers globally ranked by their support for 2022 climate-related proposals.
The state pension fund contract is one of three contracts involving Strive's proxy services that are currently in various stages of completion, Mr. Danhof said. The other two involve firms "in the private space" that represent "billions of dollars in assets under management," he said. One of them is at roughly the same stage as the state pension fund contract, while the other contract is completed, he said.
As with the pension fund, Mr. Danhof declined to name the two private firms.
"We want to respect their anonymity until such time as they want to make a public announcement because I think all three are going to probably want to make a big public announcement on this, and we don't want to steal their thunder," he said.
ISS' only agenda is to provide its clients with "tools and policy options to enable them to vote their shares in accordance with their distinct views," an ISS spokesman said in an email Tuesday.
"We welcome new entrants to the industry and hope they, like ISS, will prove to be an independent provider of research and voting recommendations focused on identifying and helping investors mitigate corporate governance risks across their portfolio companies," the spokesman said.
Glass Lewis did not respond to requests for comment.
A BlackRock spokeswoman pointed to BlackRock Voting Choice, a proprietary offering that according to BlackRock's website allows institutional clients to participate in voting decisions where legally and operationally possible.
"We built Voting Choice to expand the proxy voting options available to our clients," the spokeswoman said in an email Thursday, adding that the majority of the more than $500 billion in assets enrolled in Voting Choice "is in fact voted based on client guidelines."