The hedge fund that staged a revolt at Exxon last month is now recruiting an army of mom-and-pop investors for future battles. Every week, our lead cl

A Major New Index Fund Should Unnerve Climate-Skeptical CEOs

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2021-06-22 23:30:03

The hedge fund that staged a revolt at Exxon last month is now recruiting an army of mom-and-pop investors for future battles.

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Last month, a tiny hedge fund called Engine No. 1 staged a coup of sorts at ExxonMobil—a shareholders’ revolt that unseated three members of the oil company’s board of directors and replaced them with more climate-concerned candidates. The putsch was the first centered on climate change at an American oil company.

Now the financial group is ready to recruit ordinary investors—people with 401(k)s, Robinhooders, the macroprudentially curious—into its army. Tomorrow it is launching an exchange-traded fund, or ETF, that will track the performance of the 500 largest public companies in America, the firm told The Atlantic.

The new Engine No. 1 Transition 500 Fund is, in other words, a low-fee, diversified index fund of the type that now dominates the American stock market. Yet unlike other index-fund providers, which sit out some fights with management, Engine No. 1 has pledged to crusade. When Engine No. 1 campaigns against a company’s leadership, shares held by the Transition 500 ETF will vote for its slate. The ETF will trade on the stock market, appropriately, under the ticker symbol VOTE.