Well, that’s starting to change. There are many interesting experiments going on.
One of the most interesting is a collaboration between activist hedge fund, Engine No. 1 and asset management platform Betterment, showing that it’s easy to ask index fund investors which corporate battles they believe are worth the most.
In June the hedge fund launched a new exchange-traded fund, available to individual investors. The fund is formally called the Engine No. 1 Transform 500 ETF, but it has a catchy ticker symbol: VOTE. In important ways, the fund is quite ordinary: a plain The Vanilla ETF has an expense ratio of 0.05 percent, making it a reasonable alternative to standard S&P 500 index funds run by large companies.
But it has a clear objective of “harnessing the power of investors to really transform companies,” said Engine No. 1 managing director Michael O’Leary. Those may sound like useless words, unless you remember that engine number 1 is already there. One company shook up – Exxon Mobil, in one of the most shocking proxy fights of recent times.
The Little Hedge Fund managed three disgruntled directors elected to Exxon’s board this spring with the goal of pushing the energy giant to reduce its carbon footprint and accelerate its shift from fossil fuels. While Engine No. 1 held only a small fraction of Exxon’s shares, its arguments persuaded BlackRock, State Street and Vanguard to take their side.
Now, Betterment has included the new Vote Fund in an investment portfolio aimed at “socially responsible” investors, and is conducting a test survey, asking those investors which fight they would fight Engine No. want to pay wages. More than a thousand shareholders responded, with 60 percent saying they want hedge funds to stick with climate change: “Pushing more oil and gas giants to do away with the transition from fossil fuels” was the overwhelming priority.
Boris Khentov, Head of Sustainable Investments at Betterment, said: “We need shareholder democracy, and unless shareholders have a way to express what they want, we won’t have it. Well, we decided Did that it was really important to ask them.”
Several other experiments are underway, aimed at giving investors a clearer idea of what corporations are actually doing and what those policies have to say as much as possible. In the UK, a start-up called Tumelo, founded by several recent Cambridge graduates, has created a user-friendly web platform that enables investors to access concise, easy-to-read information about the corporations in their fund portfolios.
