Underdog activist Engine No. 1 is launching an ETF after huge Exxon win

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 guess that shareholder activism will take middle stage in coming years.

The Engine No. 1 Remodel 500 ETF will commerce below the ticker VOTE, and has obtained $100 million in commitments, the corporate mentioned Tuesday. The passive fund will spend money on 500 of the most important U.S. corporations 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 surroundings.”

The agency mentioned it’ll maintain corporations accountable on environmental, social and governance points by means of the votes it casts, whereas additionally working with corporations to strengthen investments made in stakeholders.

“Too many sustainable investing methods shift an investor’s publicity away from corporations 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 traders in a brand new means.”

Engine No. 1 has gained prominence over the previous few months after waging a marketing campaign towards 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 as a way 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 towards Exxon comes amid a surge in ESG investing, and as traders — particularly youthful generations together with millennials — more and more wish to assist corporations whose mission aligns with their values.

“There should not be a trade-off between constructive affect and monetary efficiency,” mentioned Yasmin Dahya Bilger, head of ETFs at Engine No. 1. “VOTE can be a novel answer to this long-time concern, enabling index traders the flexibility to generate long-term worth whereas bringing motion to essentially the most essential environmental, social, and governance points dealing with these corporations.”

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 can be 0.05%.