September 13 (Hfrance.fr) - Engine # 1, which won a challenge against the odds against Exxon Mobil Corp (XOM.N) earlier this year released a framework on Monday investment that drives a value to be attributed to how business activities affect the climate and society.
The "value framework Total "provides important new information on how the San Francisco-based company, which manages approximately $ 430 million in assets under management, selects companies in which to invest. The framework was presented exclusively to Hfrance.fr ahead of its publication.
Investors have closely followed the activity of the No.1 engine after three of its candidates won seats on the board of 'Exxon administration in a shareholder vote in May criticizing the energy giant's track record and goals for reducing its carbon footprint.
This fuIt's a mind-boggling victory that the No.1 engine won by owning just 0.02% stake in Exxon, and investors are looking for clues to the next moves by the company, which was launched in December of 2016. last year.
In the white paper to be released on Monday, co-authored with Wharton School management professor Witold Henisz, a cabinet adviser, Engine No. 1 said traditional environmental, social and corporate governance (ESG) scores were too far removed from the financial value placed on companies.
This makes it more difficult for investors to focus their capital on changes such as reducing emissions, Henisz said in an interview.
Instead, the # 1 driver places a value on a business 's impact on climate change, fuel consumptionwater,
"What we are adding to the party is making it an economic argument ", Jennifer Grancio, CEO of Engine No.1 said in an interview.
As an example of how his model works in practice, Grancio noted how Exxon only included around 10% of its emissions total carbon in its reduction targets, mainly by excluding emissions created when customers have burned their fuel.
When companies fully report these emissions and take steps to reduce them, "that's potentially a huge place to rise in value, " said Grancio.
The No.1 Engine, founded by hedge fund veteran Chris James, has chosen to invest in companies that make fossil fuels in order to push them to minimize their impact on the environment.
Some funds avoid fossil fuel stocks altogether. Harvard University said last week that its endowment would completely divest from fossil fuels .
Engine # 1 takes a very different approach, for example by investing in shares of energy companies in its new Transform 500 Exchange Traded Fund (VOTE.Z) , which was set up to strategically use its proxy votes.
Grancio declined to comment on what might be Engine # 1's next goal, but said it aims to be a constructive partner for business that he invested in, not in an activist hedge fund running proxy contests.
"Exxon took a lot of work and we hardly exceeded that "she said. Report by Ross Kerber in Boston Editing by Greg Roumeliotis a nd Sonya Hepinstall
Our standards: Thomson Hfrance.fr's principles of trust.