TCI Urges Carbon
Disclosures in New ESG Push
The activist fund manager may be
seeking to attract environmentally conscious investors with 17
environmental campaigns targeting Union Pacific, Canadian National
Railway, Univar Solutions and others.
Updated on December 02, 2019, 12:26 PM ET
TCI's Christopher Hohn
Billionaire activist hedge fund manager Christopher Hohn is looking to
improve his credibility with environmentally focused investors.
least that’s the view of experts reviewing recently disclosed letters
the insurgent fund manager behind London-based investment firm TCI
Fund Management Ltd. sent to 17 publicly traded corporations last
month, saying he would punish their directors if they failed to
disclose their carbon dioxide emissions.
According to the letters, first reported by the Financial Times, TCI has
Inc. (GOOGL), Canadian
National Railway Co. (CNI), Union
Pacific Corp. (UNP), Univar Solutions Inc. (UNVR) and
other corporations that it would vote against their directors in
uncontested elections if they did not provide climate transparency.
fund also urged other institutional investors to fire investment
managers who do not push corporations to disclose information about
greenhouse gas emissions. a comment that has led some observers to
believe Hohn is seeking to compete with large active and index fund
managers for investment allocations.
Andrew Freedman, partner at Olshan
Frome Wolosky LLP, said the TCI effort comes as demand
for so-called environmental, social and governance-focused investment
vehicles has increased substantially.
“There's high demand these days for ESG-based investment vehicles,”
Freedman said. “TCI's position vis-à-vis climate change shows there is
a growing confluence between philanthropy and investing. Large money
managers now have a means to ‘practice what they preach’ through these
Unlike many ESG-focused investment vehicles, TCI, formerly the Children’s
Investment Fund, holds large positions in targeted
companies. For example, TCI is Univar’s largest shareholder with a
9.9% stake. As a result, the fund likely holds significant sway at the
chemical and ingredients distributor. The fund also owns 4.7%, 2.7%,
1.6% and 0.7% of Charter
Communications Inc. (CHTR), CN, Anthem
and Union Pacific, respectively. Each of the companies received
letters from TCI.
TCI’s large positions likely give it more leverage to negotiate on
carbon disclosure issues than smaller pure-play ESG-focused investment
firms such as Boston Trust Walden Co. or Trillium Asset Management
LLC. In addition, a number of traditional active and index funds have
begun to concentrate more on ESG issues, and TCI's initiative could
help it gain the support of those investors. The allocation, however,
raises questions about whether non-ESG investors who are focused on
shareholder performance also would support the move.
Lutin, founder of the Shareholder Forum, said TCI is a lot better than
the present set of presidential candidates at managing its voting
“They have an understanding of what their own investors want, and they
are marketing to them,” Lutin said. “They are also appealing very
publicly to the investors whose assets are managed by BlackRock and
index fund managers, encouraging those managers to support TCI's
traditional activist campaigns.”
addition, Lutin noted that this new TCI effort is an attempt at
competing with other activist funds and index funds for the spotlight.
BlackRock has to think about whether they will vote with TCI against
companies that don’t disclose their carbon emissions,” Lutin said.
London-based proxy solicitor said TCI’s effort provides further
evidence that investors, even activists, are jumping on the bandwagon
of ESG responsibility.
Another investment adviser, though, said he was less than convinced
that TCI has transformed itself into an investor that really cares
about environmental issues. He said TCI is seeking to join insurgent
Partners LLC and ValueAct
Capital Partners LP, which are traditional concentrated
activist investors that also have sought to focus on ESG issues. Last
year, Jana Partners, for example, set up a social impact fund with a campaign seeking
to curb smartphone and iPad addiction among children.
letters and ESG strategy appear to represent a shift for Hohn, who is
much more well known for his activist hedge fund approach that often
involved launching insurgency campaigns with a focus on improving
shareholder value. The strategy likely is part of a broader effort to
attract ESG-specializing institutional investors, or big shareholders
who are eager to have investment managers focus on ESG-related issues.
example, TCI in 2018 engaged in campaigns at Twenty-First
Century Fox Inc. (FOXA) and London
Stock Exchange Group plc. The fund manager issued a
publicly disclosed letter to Fox executive
Murdoch to consider a bid from Comcast
Corp. (CMCSA). In addition, he pushed for
the removal of then-LSE chairman Donald Brydon, who was replaced in
January. In 2016, Hohn initiated a
campaign with a scathing letter targeting Volkswagen Group AG,
demanding it overhaul its “overpaid management” pay plans and improve
share price performance.
Deal reported in May that an activist campaign could
emerge at Univar, where a number of hedge funds,
including TCI, had accumulated significant stakes.