Info on Engine No. 1

Narrative

Engine No. 1 was founded in 2020, and has a different approach.  It views ESG not from an ideological or ethical viewpoint, but from an economic viewpoint.  It invests in the entire stock market, and works to find the full effect of a company’s policies on its profit.  It made news in 2021 as a shareholder in Exxon-Mobil by arguing that climate change was bad for the company’s long-term profitability.  This argument won over major Exxon shareholders such as BlackRock, Vanguard, and State Street, which voted to put three Engine No. 1 candidates onto the Exxon board of directors.

The website says: 

Rather than excluding companies that need to change, VOTE [their ETF ticker symbol] works to change them. ... There shouldn’t be a trade-off between investing for the long-term and holding companies accountable. VOTE gives investors a new opportunity to drive positive impact as engaged owners.

However, the fund does not describe its advocacy work in detail, except to say that it considers "wages, workforce diversity, board composition, employee health and safety, carbon emissions, air pollution, and land use, among others."  I did not find any examples.  Therefore, in spite of this fund's spectacular success in making a dent in one fossil fuel company in 2021, a climate-focused investor might wish to choose a mutual fund that concentrates more on climate change.

 

Funds Offered

They offer a single ETF,

  • Engine No. 1 Transform 500 ETF, with ticker symbol VOTE.

Fees and Hassles

One share of an ETF represents a slice of a basket of company stocks, just like a share of a traditional mutual fund.  However, an ETF is bought and sold on the open market, just like a company’s stock.  Any fees are those that are involved in buying or selling stock.

If one is trying to withdraw a specific amount of money, for example to make a required distribution from an IRA, an ETF is less convenient than a traditional mutual fund.  The reason is that a traditional mutual fund allows one to withdraw a specified amount of money, with the corresponding (fractional) number of shares calculated from the closing price at the end of the day.  An ETF, on the other hand, only allows one to sell a specified (whole) number of shares, with the exact dollar amount determined at the instant when the sale goes through.