The battle over ESG (environmental, social, and corporate governance) investing has just entered a heated new level. It all began when Ron DeSantis, the Republican governor of Florida, signed an executive order to prohibit state government agencies from investing in companies that practice ESG investing or any “divestment activities” related to it. This order sparked a heated debate between the political party and those who support ESG investing.
Vivek Ramaswamy, who co-founded Strive Asset Management, a new investment firm, spoke out about the issue. He calls this kind of socially conscious investing—not political corruption as DeSantis has suggested—as a way of creating value.
Ramaswamy, who recently spoke at an event hosted by the Council on Foreign Relations, told the audience that Strive would soon offer investment products that would focus on ESG investing. He said that the firm would be launching an ESG fund soon.
At the event, Ramaswamy was joined by Strive Asset Management's executive vice president and head of products & investment Matt Cole to discuss the Strive U.S. Energy ETF (NYSE Arca: DRLL). This ETF seeks to provide investors with exposure to a portfolio of U.S. Energy sector stocks that have strong ESG credentials as measured by the MSCI ESG Leaders Index.
Ramaswamy also spoke about the potential of ESG investing to create value. He believes that companies should take a “flywheel” approach when it comes to ESG investing, investing in employee happiness. In other words, they can take a “flywheel” approach. According to this philosophy, businesses strive to build a cycle of improvement, starting with their employees. This can include things like providing better wages, benefits, and opportunities for career growth.
In addition to Strive Asset Management, several other companies have recently made investment in ESG-related projects. For example, NBA star Holiday recently signed a deal with Strive, a sports and entertainment marketing platform. And The Players' Lounge Gains Seed investment From Draper Associates VC, a venture capital firm, for its player-focused video game platform.
However, despite the potential of ESG investing, some investors are skeptical. A few weeks ago, investors felt relief when Bitcoin found stability at around $20,000, after a rollercoaster ride in the crypto market. This has made some investors wary of investing in digital assets.
In general, investors should be mindful of the risks associated with investing in ESG-related assets. To cite a simple example, suppose you strive to hold 60% of your investment in stocks/stock funds and the other 40% in bonds/bond funds. As ESG-related investment are usually more volatile than stocks and bonds, you should consider the risk of your portfolio becoming unbalanced.
In addition, while ESG investing is becoming increasingly popular, the industry is still relatively new and is still developing its standards and principles. This means that investors need to be careful when choosing investment.
Finally, ESG investing requires resources to be allocated to companies in order to make a positive impact. Also, the service industry is said to be facing a shortage of manpower. Companies should strive to make positive investment to address the issue and create jobs.
