Capitalism Has Gotten ‘Too Short Term,' Says CEO Behind New Activist Investing ETF

Brendan McDermid | Reuters

The underdog activist firm that successfully took on Exxon Mobil isn't stopping at the oil giant.

The recent launch of Engine No. 1's new Transform 500 ETF (VOTE) builds on its mission to help companies create lasting value via active ownership, CEO Jennifer Grancio told CNBC's "ETF Edge" on Monday.

"We started Engine No. 1 thinking that capitalism that has gotten, frankly, too short term," Grancio said.

The firm's solution is twofold, she said, "help investors be activists and active owners in companies and also help companies understand how their impacts relate to their long-term financial value."

The VOTE ETF, which holds shares of the 500 largest publicly traded companies and promotes sustainable environmental, social and governance practices, is a natural confluence of those two goals, the CEO said.

"Every year, we'll be very assertive on how we vote [on] all of those shares on the behalf of the clients," Grancio said. "Whether they're public plans, wealthy families or, frankly, millennials and personal investors, it's time and there's a demand for people to be active owners."

Not every battle will rise to Exxon's level, however, Grancio said.

"Sometimes we will do a campaign that's as big and leads to a proxy battle like an Exxon and in many other cases we'll be working with these companies, with the data, to show them how they can address impacts of their businesses ... and help them realize higher long-term value," she said.

VOTE's ideology hinges on the idea that these initiatives will reap more benefits if other investors join the charge, Grancio said.

"We're a purpose-built firm to do only this," the CEO said. "So, if it works for us to be the tip of the spear on these issues and it makes it easier for others to follow on some of these issues, that's terrific. That's terrific for investors."

VOTE is up just over 1% since its June 23 launch.


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