Engine No. 1
Industry | San Francisco, California , U.S. |
---|---|
Area served | Worldwide |
Number of employees | 39 |
Website | engine1 |
Engine No. 1 is an American
The fund was founded in December 2020[3][7] and its most recent[a] 13F filing indicated that it had $430 million in assets under management.[8] Jennifer Grancio is the fund's chief executive officer and Christopher James its executive chairman.[9][10] As of October 2021, the fund employed 39 staff.[11]
History
Engine No. 1 was founded by
Christopher James
Christopher James, the firm's founder and executive chairman,[10] grew up in Harrisburg, Illinois.[12] He studied economics at Tulane University and later served on its board of trustees.[12][15] During the dot-com boom, he operated a coal mine in Illinois and built storage facilities for the oil and gas sector.[12] He also founded and worked for a number of investment funds before founding Engine No. 1.[12]
James was a founder of Tipping Point Community, an anti-poverty organisation based in San Francisco.[11] Working mainly on the area's homelessness problem, he realized that many of his peers were working for tech companies, which were the major factor behind rising rents.[11] After this realization, he began reading up on the social value of business, with writings including those of Luigi Zingales and Michael Porter. He concluded that companies should take care of their impacts and decided to found Engine No. 1 in 2020.[11]
ExxonMobil
Engine No. 1's decision to invest in ExxonMobil was sparked by a family dinner of James in 2019.[12] His sons asked him how he squared environmentalism – he served on the board of the National Fish and Wildlife Foundation – with his investments in energy companies.[12] After finding his own answer lacking, he decided to "take on" ExxonMobil.[12]
Engine No. 1 bought a stake in ExxonMobil worth $40 million in December 2020,[16] which equated to about 0.02% of the oil company's shares.[1] At that time, institutional investors were already becoming frustrated with the company lagging behind its competitors in preparing for the energy transition,[17] ExxonMobil also incurred a $22 billion loss that year.[12]
Open letter
On December 7, 2020, James wrote an open letter to the board of directors, pointing out Exxon's poor
Given their small stake in the company, the investment fund's strategy relied on convincing Exxon's large shareholders, the largest three being BlackRock, The Vanguard Group and State Street, to back its plans.[1] Engine No. 1 appealed less to environmental principles and more to profitability in their strategy to convince investors.[18] It said that Exxon's focus on fossil fuels threatened future returns,[18] stating that the company faced "existential risks".[19]
Reactions
Exxon reacted to Engine No. 1's campaign by expanding its board and adding a director with sustainable investing experience.[20] It also announced a plan for a carbon capture business and a new carbon capture technology venture, both believed to be a consequence of Engine No. 1's activities.[21] According to Exxon, the company expected to spend $35 million on the proxy battle. Engine No. 1 estimated its costs to add up to $30 million.[21] Some experts believed Exxon's spending to hit $100 million.[20]
The
On May 26, 2021, the day of the shareholder meeting, preliminary vote counts suggested that at least two of Engine No. 1's candidates would be successful.[26] During the meeting, ExxonMobil declared a one-hour recess, ostensibly following demands by shareholders for more time to consider their votes.[26] The move was believed to provide further opportunity for negotiations over votes and was described by a former oil executive as "pretty desperate".[27] By the end of the meeting, two candidates had been elected to the board of directors, with the vote over a third one being too close to call.[28] A week later, Exxon announced that Engine No. 1's slate had won a third seat.[29]
According to industry experts, changing ExxonMobil's strategy will be a difficult and protracted process.[30]
Medlock Investments, owned by Christopher James, is the
Investment activities
As of June 2021, Engine No. 1 holds small stakes in
ETF
On June 23, 2021, Engine No. 1 launched an
The Engine No. 1 Transition 500 ETF (trading under the ticker VOTE)[38] tracks the largest 500 companies in the US by market capitalization.[39] Instead of selecting and excluding stocks based on ESG criteria, the ETF seeks to align the companies invested in with its ESG goals.[40][41] The active role it will take in corporate governance is unusual for an ETF,[42] but becoming more common.[43] The ETF will also use its shares to support proxy campaigns of Engine No. 1.[42] It is open to retail investors, advisors and pension plans via Betterment's investment platform.[40] As of March 2022, it had $329 million in assets.[43]
The firm launched a second ESG fund in February 2022.[44] The Transform Climate ETF (trading under NETZ) is actively managed and invests in firms active in the largest carbon-emitting industries.[44][45] At the time of its launch, its three largest holdings were General Motors, John Deere, and Occidental Petroleum.[44]
In October 2023, Engine No. 1 sold its ETF platform to the TCW Group.[46]
Notes
References
- ^ ISSN 0362-4331. Retrieved 2021-10-13.
- ^ Kerber, Ross (2022-01-12). "After Exxon win, Engine No. 1 turns to diversity, workforce issues". Reuters. Retrieved 2022-02-15.
- ^ a b c d Herbst-Bayliss, Svea (2020-12-01). "Hedge fund veteran launches impact firm with former Jana, BlackRock executives". Reuters. Retrieved 2021-10-13.
- ^ Herbst-Bayliss, Svea (2021-06-02). "Investment firm Engine No. 1 prepares to launch Transform 500 ETF after Exxon win". Reuters. Retrieved 2022-03-02.
- ^ Kishan, Saijel; Carroll, Joe (2021-06-09). "The Little Engine That Won an Environmental Victory Over Exxon". Bloomberg. Retrieved 2021-10-16.
- ^ Choe, Stan (2021-12-28). "After shaking up Exxon's board, Engine No. 1 widens its sights". Los Angeles Times. Retrieved 2022-03-28.
- ^ Kishan, Saijel (2020-12-01). "Hedge Fund Veteran Chris James to Start Impact-Investing Firm". Bloomberg. Retrieved 2021-10-13.
- ^ Graffeo, Emily (2022-01-24). "Engine No. 1 Lays Its Cards on the Table for Next Proxy Targets". Bloomberg. Retrieved 2022-01-30.
- ^ Crowley, Kevin; Hyde, Caroline; Romaine, Bostick (2021-10-20). "Engine No. 1 Wants Exxon to Make Different Capital Decisions". Bloomberg.com. Retrieved 2021-10-27.
- ^ a b "Meet the team". Engine No. 1. Retrieved 2021-10-13.
- ^ a b c d Celarier, Michelle (2021-10-06). "The Commonsense Capitalism of Chris James". Institutional Investor. Retrieved 2021-10-13.
- ^ ISSN 0099-9660. Retrieved 2021-10-13.
- ^ Klayman, Ben; Herbst-Bayliss, Svea (2021-10-04). "Engine No. 1 backs GM's strategy around transition to EVs". Reuters. Retrieved 2021-10-13.
- ^ Herbst-Bayliss, Svea (2021-11-15). "EXCLUSIVE Engine No. 1 partner leaves hedge fund after successful challenge of Exxon". Reuters. Retrieved 2021-11-27.
- ^ Hodge, Taylor (2021-06-04). ""Green Activist" Investor and Former Tulane Trustee Board Member, Chris James, Pushes Toxic Grain Elevator in Majority Black Community". Big Easy Magazine. Retrieved 2021-10-13.
- ^ ISSN 0017-8012. Retrieved 2021-10-13.
- ^ Herbst-Bayliss, Svea; Hiller, Jennifer (2021-05-27). "The little engine that could, and the oil giant that couldn't". Reuters. Retrieved 2021-10-13.
- ^ France24. Retrieved 2021-10-16.
- ^ Brower, Derek; Jacobs, Justin (2021-04-25). "Exxon faces 'existential' risk over fossil fuel focus, activist investor warns". Financial Times. Retrieved 2021-10-13.
- ^ a b Hiller, Jennifer; Herbst-Bayliss, Svea (2021-04-15). "Exxon, activist spend over $65 mln in battle for oil giant's future". Reuters. Retrieved 2021-10-13.
- ^ a b DesJardine, Mark; Bansal, Tima (26 May 2021). "Engine No. 1's big win over Exxon shows activist hedge funds joining fight against climate change". The Conversation. Retrieved 2021-10-13.
- ^ Aliaj, Ortenca; Brower, Derek; McCormick, Myles (2020-12-10). "ExxonMobil under pressure as Church of England joins investor campaign". Financial Times. Retrieved 2021-10-13.
- ^ "Proxy adviser backs activist call for Exxon board overhaul". California News Times. 2021-05-14. Retrieved 2021-10-13.
- ^ Brower, Derek (2021-05-14). "Proxy adviser backs activist call for Exxon board overhaul". Financial Times. Retrieved 2021-10-13.
- ^ "Advisory firm Glass Lewis backs two dissident nominees in Exxon battle". Reuters. 2021-05-18. Retrieved 2021-10-13.
- ^ ISSN 0362-4331. Retrieved 2021-10-13.
- ^ Mufson, Steven (2021-05-26). "A bad day for Big Oil". The Washington Post. Retrieved 2021-10-13.
- ^ Stevens, Pippa (2021-05-26). "Engine No. 1 wins at least 2 Exxon board seats as activist pushes for climate strategy change". CNBC. Retrieved 2021-10-13.
- ^ Stevens, Pippa (2021-06-02). "Activist firm Engine No. 1 claims third Exxon board seat". CNBC. Retrieved 2021-10-13.
- ISSN 0362-4331. Retrieved 2021-10-13.
- ^ a b McConnaughey, Janet (AP) (2021-11-11). "Fight Over $400M Grain Terminal Turns to 'Corrupt Zoning'". Biz New Orleans. Retrieved 2022-02-01.
- ^ a b Parker, Halle (2021-10-16). "Is this Louisiana town right for a $400 million grain terminal? Some residents say no". The Times-Picayune/The New Orleans Advocate. Retrieved 2022-02-01.
- ^ Hodge, Taylor (2021-06-04). ""Green Activist" Investor and Former Tulane Trustee Board Member, Chris James, Pushes Toxic Grain Elevator in Majority Black Community". Big Easy Magazine. Retrieved 2022-02-01.
- ^ Burnett, John; Peñaloza, Marisa (2021-07-07). "Descendants Of Slaves Say This Proposed Grain Complex Will Destroy The Community". NPR. Retrieved 2022-02-01.
- ^ Brower, Derek; Aliaj, Ortenca (2021-06-03). "Engine No 1, the giant-killing hedge fund, has big plans". Financial Times. Retrieved 2021-10-14.
- ^ Stevens, Pippa (2021-10-04). "Upstart activist Engine No. 1 takes stake in GM, supports EV transition plan". CNBC. Retrieved 2021-10-27.
- ^ Napach, Bernice. "Engine No. 1 Introduces a New Kind of Purpose-Driven ETF". ThinkAdvisor. Retrieved 2021-10-13.
- ^ Stevens, Pippa (2021-06-22). "Underdog activist Engine No. 1 is launching an ETF after big Exxon win". CNBC. Retrieved 2022-02-06.
- ^ Gordon, Jamie (2021-07-19). "ESG engagement in focus following Engine No.1 launch". ETF Stream. Retrieved 2021-10-13.
- ^ a b Baker, Andrew (2021-06-30). "Engine No. 1 Looking Beyond ExxonMobil with ETF Launch". Naturalgasintel.com.
- ^ Dunn, Katherine (2021-10-13). "This tiny investment firm took on ExxonMobil, and won. Now it's launching an ETF". Fortune. Retrieved 2021-10-13.
- ^ a b Meyer, Robinson (2021-06-22). "A Major New Index Fund Should Unnerve Climate-Skeptical CEOs". The Atlantic. Retrieved 2021-10-13.
- ^ a b Hamlin, Jessica (2022-03-25). "Activist Approaches May Gain Ground as Investors Get Pragmatic About Fossil Fuel Companies". Institutional Investor. Retrieved 2022-03-28.
- ^ Barron's. Retrieved 2022-02-06.
- ^ Webb, Dominic (2022-02-04). "Friday Funds: Engine No. 1 launches transition ETF". Responsible Investor. Retrieved 2022-02-06.
- ^ "Engine No. 1 Closes Sale of ETF Business to TCW". Engine No. 1. Engine No. 1. Retrieved 20 May 2024.
External links
- Official website
- Proxy campaign website of Engine No. 1