A view of the ExxonMobil Baton Rouge Refinery in Baton Rouge, Louisiana, Could 15, 2021.
Kathleen Flynn | Reuters
Engine No. 1, the upstart activist agency that put three candidates on Exxon’s board of administrators, is launching an exchange-traded fund in a wager that shareholder activism will take heart stage in coming years.
The Engine No. 1 Rework 500 ETF will commerce underneath the ticker VOTE, and has acquired $100 million in commitments, the corporate mentioned Tuesday. The passive fund will put money into 500 of the most important U.S. firms and observe the Morningstar U.S. Giant Cap Choose Index, with the intention of serving to to “instigate constructive change for workers, clients, communities, and the atmosphere.”
The agency mentioned it can maintain firms accountable on environmental, social and governance points via the votes it casts, whereas additionally working with firms to strengthen investments made in stakeholders.
“Too many sustainable investing methods shift an investor’s publicity away from firms that want to vary quite than working to vary them,” Engine No. 1 managing director Michael O’Leary mentioned in a press release. “We see a possibility to harness the ability of buyers in a brand new manner.”
Engine No. 1 has gained prominence over the previous few months after waging a marketing campaign in opposition to Exxon, which in the end proved profitable. The agency started concentrating on the oil large in December 2020, saying Exxon wanted to shift its operations and considerably scale back emissions in an effort to guarantee long-term monetary viability.
The activist agency nominated 4 board administrators, two of which it secured at Exxon’s annual shareholder assembly in Could, which spanned a number of hours and included a shock one-hour recess between periods.
The vote over a 3rd candidate was too near name on the assembly’s conclusion, however was later confirmed in favor of Engine No. 1.
The marketing campaign in opposition to Exxon comes amid a surge in ESG investing, and as buyers — particularly youthful generations together with millennials — more and more need to help firms whose mission aligns with their values.
“There should not be a trade-off between constructive impression and monetary efficiency,” mentioned Yasmin Dahya Bilger, head of ETFs at Engine No. 1. “VOTE might be a singular resolution to this long-time concern, enabling index buyers the flexibility to generate long-term worth whereas bringing motion to probably the most crucial environmental, social, and governance points going through these firms.”
Engine No. 1 mentioned that digital funding advisor Betterment will combine the brand new fund into its socially accountable investing methods. The fund’s annual expense ratio might be 0.05%.
Turn into a better investor with CNBC Professional.
Get inventory picks, analyst calls, unique interviews and entry to CNBC TV.
Signal as much as begin a free trial at the moment