June 2, 2022
3:31 PM EDT
Climate Change |
Corporate Governance |
Shareholder Activism |
Engine No. 1 rushes to
back ESG disclosures at top companies
Signage is seen at
an Exxon gas station in Brooklyn, New York City, U.S., November 23,
June 2 (Reuters) - Sustainability-focused hedge fund Engine No. 1 has
backed 83% of shareholder resolutions on environmental, social and
governance (ESG) topics at top U.S. companies so far this year as it looks
to arm investors with more information, leaders said.
Ballot items, such as several at Exxon Mobil Corp calling for more details
around reduced plastic use and emissions-cut scenarios, help investors
understand a business, Engine No. 1 founder and executive chairman,
Christopher James, said in an interview with Reuters on Wednesday.
"We're always going be in favor of more data," James said.
The voting by Engine No. 1 - detailed in disclosures by its $347 million
Transform 500 exchange-traded fund - contrast with some corporate election
trends during the current proxy season.
The votes also show how James and Chief Executive Jennifer Grancio have
shifted focus compared with last year when Engine No. 1 forced out three
of four Exxon directors it targeted over what the firm called the
company's slow response to climate change.
For now, James waved off challenges to directors elsewhere.
"We don't have anything on the docket," he said. Talks with firm holdings
like General Motors Corp on battery technology are "constructive" he said.
At Exxon's annual meeting on May 25, Engine No. 1 supported all 11 of the
company's director nominees and supported four of seven shareholder
Shifts under Exxon's new board, such as moving its headquarters to Houston
and hiring senior leaders from outside show "there has clearly been a huge
and fundamental change" in how the firm treats climate risk, James said.
One resolution the firm opposed called for Exxon to set
emissions-reductions targets including for "Scope 3" emissions created via
use of its products.
Proponent Mark van Baal of activist group Follow This called the vote "an
inexplicable U-turn" compared with last year when Engine No. 1 highlighted
Exxon's lack of Scope 3 disclosure.
James said the vote was justified since Scope 3 accounting methods are
James also said he agreed with recent criticism by Tesla Inc CEO Elon Musk
that current systems use to rate corporate ESG performance are flawed,
which Musk made after Tesla was dropped from a high-profile ESG index. read
"For Tesla not to get credit for the decarbonization drive they're doing,
I think he's right," James said.
Reporting by Ross Kerber Editing by Marguerita Choy
© 2022 Reuters.