The fund had backing from “big three” institutional investment firms BlackRock, Vanguard, and State Street.
Exxon wasn’t the only target of shareholder activism. The world’s largest oil producers, such as Shell, Chevron, and BP, have all faced shareholder revolts from activist investors who urged them to address climate change.
However, the actions of these investors have crippled U.S. oil and gas production, contributing to the current energy crisis, according to Vivek Ramaswamy and Anson Frericks, co-founders of Strive, an Ohio-based asset management firm.
Launched in May, Strive says it wants to replace the voices of large investment firms in the U.S. economy with those of everyday citizens. The founders claim that large fund managers breach their fiduciary duties by placing too much emphasis on climate change and “stakeholder capitalism” rather than higher returns.
US Energy Crisis
On Independence Day, the startup announced that it launched a “five-week national education campaign to draw attention to the American energy crisis and how U.S. citizens are unknowingly contributing to the problem through their investment accounts.”The founders of the firm believe that every day firefighters, police officers, teachers, doctors, and small-business owners funnel their money into these large asset managers through their retirement funds. But the shareholder voting and engagement behaviors of these investment funds in the past few years have pressured U.S. energy companies to produce less oil and natural gas in the United States, causing high energy prices, they said.
“Our expectation from this campaign is to make the energy sector more successful in the United States,” Frericks told The Epoch Times.
He criticized BlackRock, Vanguard, and State Street for investing based on ESG (environmental, social, and governance) standards that may be in conflict with the interests of their clients.
Since losing board seats to activist investors, Exxon has cut long-term production plans, maintaining oil output at its lowest level in two decades, according to Strive’s founders.
“The same large asset managers who pressure U.S. companies to adopt climate change strategies by reducing oil and gas production stay notably silent as their Chinese portfolio companies behave in the opposite manner,” Ramaswamy said in the statement. “American citizens are left holding the bag twice, both as investors and as consumers at the pump.”
‘Depoliticized’ Investment
The big three asset managers, which hold nearly 20 percent of the outstanding shares of the S&P 500, have made substantial climate pledges during the past few years, according to an article by Harvard Law School Forum on Corporate Governance.They manage collectively about $20 trillion worth of assets and wield enormous power on corporate boards because of their voting rights, according to Frericks.
This is problematic, he says, since these three asset managers are all promoting the same ideology, namely stakeholder capitalism and ESG.
“We try to bring new ideas, diversity of thought, diversity of opinion because we think there are 100 to 150 million American investors who want a depoliticized asset management company,” Frericks said. “Our mission is to advance excellence over politics in boardrooms across America.”
Strive has raised $20 million from venture capitalists to help hire staff and build investment products. The first fund of the company will be launched in the third quarter of this year.
Similar to those offered by Blackrock, State Street, and Vanguard, the business is developing large, predominantly passive investment products, according to Frericks.
“We’ve been incredibly humbled by the outpouring of support we’ve received,” he said, citing investors and prospective employees in particular.
Vanguard and State Street didn’t respond to a comment request from The Epoch Times.
BlackRock, the world’s biggest investment manager with more than $10 trillion in assets, declined to comment, but referred to its proxy vote bulletin for Exxon that explained the asset manager’s position at last year’s annual meeting.
“Over the past several years, we have intensified our focus with the company on its long-term strategy, and Exxon’s underperformance relative to both its peers and the S&P 500 over the last five years,” the fund manager said.
Rising Backlash
The energy crisis is fueling a backlash against big asset management firms.“As Americans have poured savings into exchange-traded and mutual funds, index providers have become the de facto largest shareholders of public companies,” the editorial board wrote.
The publisher criticized the investment firm for using its market power for political purposes.
Fink has repeatedly said that “climate risk is investment risk.”