Engine No. 1 Reaches Beyond Exxon With New ETF

Activist investor Engine No.1 will soon launch its first exchange-traded fund (ETF) as it extends its efforts to improve the environmental and social impacts of large U.S. corporations beyond supermajor ExxonMobil. 

Engine No.1’s first ETF will be named Engine No. 1 Transform 500 ETF and will trade under the ticker VOTE, the activist investor said on Tuesday, nearly a month after winning three board seats at ExxonMobil demanding that the U.S. oil giant start preparing for creating long-term value in the energy transition. 

The ETF VOTE will invest in a market-cap weighted index of the 500 largest U.S. stocks and will seek to track the Morningstar U.S. Large Cap Select Index. Rather than excluding or re-weighting stocks, VOTE will seek to improve the environmental and social impacts of the companies through strategically holding companies and leadership teams accountable while focusing on environmental, social, and governance (ESG) issues that create value. 

“The problem isn’t passive investing, it’s passive ownership,” Engine No. 1 Managing Director Michael O’Leary said in a statement. “Too many sustainable investing strategies shift an investor’s exposure away from companies that need to change rather than working to change them. We see an opportunity to harness the power of investors in a new way,” O’Leary added. 

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According to Yasmin Dahya Bilger, Head of ETFs at Engine No. 1, “There shouldn’t be a trade-off between positive impact and financial performance.” 

Engine No. 1, which launched just six months ago, scored a huge victory for activist shareholders at Exxon’s annual general meeting last month, winning three board seats despite the tiny stake that it holds in the oil supermajor. The Engine No. 1 win signaled an unprecedented shift of shareholder sentiment in the oil and gas industry. The vote, according to observers, signals the continued displeasure of a growing number of shareholders with how Exxon is handling the push for lower-carbon energy and calls to do more to mitigate the impact of its business on the environment.  

By Tsvetana Paraskova for Oilprice.com

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