Indiana’s state pension fund has contracted “anti-woke” asset manager Strive to advise on proxy voting and ESG, becoming the first publicly recorded client for the firm’s new advisory service.
Tony Green, deputy executive director at Indiana Public Retirement System (INPRS), made the comment at a meeting of the house financial institutions committee in January on Bill 1008.
The bill would require Indiana’s public pension system to divest from investment firms or funds that use ESG investment criteria. It has been passed by the lower house of the Indiana General Assembly.
Green said the $45.8 billion pension fund had updated its investment policy statement for managers in light of the growing prevalence/discussion around ESG.
During the process, he said INPRS became aware of “other collateral issues like proxy voting”.
“Even though we’re investing our money based on those pecuniary or economic and financial principles, others might have different agendas,” he said. “So how do we shepherd our way?”
This prompted INPRS to hire Strive Asset Management “to come in and advise as we’re trying to figure out how to reconcile these proxy votes and how we monitor and manage those proxy votes”.
Co-founded by vocal ESG opponent Vivek Ramaswamy and Anson Frericks in 2022, Strive Asset Management was set up to provide a counter voice to ESG in the investment markets, which Ramaswamy has called “one of the defining threats to both capitalism and democracy”. Its largest product by assets under management is a US oil and gas ETF.
At the time of publication neither INPRS or Strive had responded to Responsible Investor’s request for more details on what exactly said service entailed.
Green also raised concerns that, in order to comply with the bill, the pension fund might have to “spend more money and more resources on those entities that are going to be monitoring, managing and checking on the ESG process and its impact”.
Pitching to pensions
It seems Indiana is not the only state that Strive has set its sights on.
The firm has been touting its services in other Red states – particularly its Outsourced Shareholder Engagement and Proxy Voting Consulting Services (OSEP), which offers stewardship consulting, engagement and proxy voting and advisory services.
Strive has approached public investors in North Dakota, Oklahoma and Missouri, according to documents provided to Responsible Investor by investigative watchdog and journalism project, Documented.
In Oklahoma, CIO of the Teacher’s Retirement System Kirk Stebbins reported to chief executive Sarah Green that Strive “has been making the rounds among our peer funds to capitalise on the ESG/anti-ESG issue”, after receiving a pitch from them.
Missouri State Employees Retirement System (MOSERS) held multiple meetings with Strive in July and August last year, and Ramaswamy addressed the board’s annual educational conference on ESG.
However, in internal emails obtained by Documented, MOSERS staff discussed whether it was appropriate to invite Ramaswamy. Executive director Ronda Stegmann said her “thought is we want to keep this meeting to education and not include someone who is actively recruiting investors for a fund”.
In North Dakota, documents show that Strive held multiple conversations last autumn with state officials including Jan Murtha, executive director of the North Dakota Retirement and Investment Office, and Scott Anderson, its CIO.
Strive shared with Anderson a letter of intent on OSEP it had sent to another state, believed to be Indiana, in response to a request for a proposal.
An email sent to Joseph Heringer, the state’s commissioner of university and school lands and State Investment Board member, also mentions that Strive is “actively engaged with other states” on OSEP.
Trouble in Kansas
In other backlash news, a Kansas bill which was praised by the state’s attorney general as “the strongest anti-ESG bill in the country” has been pulled and replaced with a watered-down version.
The Kansas Public Employees Retirement System (KPERS) had claimed the original could reduce returns by $3.6 billion over the next 10 years.
SB224 contained provisions on proxy voting, divestment from and contract bans with financial institutions involved in “ideological boycotts”, and was due to be considered by the Committee on Federal and State Affairs this week. However, it has now been replaced with SB291, which requires investment managers and proxy advisers to commit in writing to act solely on financial factors.
The new bill is 16 pages shorter.
Speaking at the committee hearing on Wednesday, Alan Conroy, executive director of KPERS, reiterated the $25 billion fund’s opposition to the restrictions. Conroy said the fund was not usually a proponent or opponent of legislation, but “unfortunately I think we are in a position to have to oppose this bill as it’s introduced”.
“We think the current law would make it very difficult to retain our current fund managers,” Conroy said, noting that KPERS lawyers’ interpretation of the legislation was that it would preclude the fund from doing business with any company that has ESG activities.
“We think we’d have to restructure the portfolio to comply with the bill as introduced,” he added, warning that it could cause an estimated $3.6 billion loss over 10 years and would have a significant impact on KPERS’ funding ratio, reducing it from low 70 percent to low 60 percent.
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