Last year, a small and little-known investment firm came out of nowhere and defeated the board of Exxon Mobil, the biggest American oil company. Engine No. 1 invested some $40 million, won a shareholder vote, and wound up with three Exxon Mobil
board seats, demanding the giant corporation implement a clean energy strategy that had teeth.
Jennifer Grancio, Engine No.1’s CEO, is pushing the firm forward as it works to broaden the ESG movement. She has helped to reinvent the investing industry before. As a member of the team that founded the iShares ETF family at Barclays and expanded it at BlackRock, Grancio played a role in ushering in the era of passive investing.
On MarketWatch’s 25th anniversary, we wanted to ask Grancio what she thought was in store for us when it comes to ESG investing. Here are her lightly edited comments:
As MarketWatch turns 25, we ask Engine No. 1 chief what’s next for ESG investing.
What do you think you’ll be reading in MarketWatch in the next five years?
Grancio: I’m looking forward to reading that battery electric vehicles have taken over internal combustion engines and, more to the point, I think in five years when we look at the best, hottest, most fun cars of the year, they’re going to be battery electric. We will be on the other side of this transition.
What opportunities do you see today that you think will be more clear in five years?
Grancio: An opportunity that I see today — and at Engine No. 1 we are very excited about this opportunity today — but I think it’ll be more clear to everybody in five years, is that we’re going to see a huge return of manufacturing to the U.S. There are going to be a lot of jobs and job creation and I think it’s going to make America an extremely competitive place from a global perspective. So we see it now, but I think other people will be talking about it five years from now.
What do you fear that you’ll be reading in MarketWatch in five years?
Grancio: I fear that the country will still be too partisan. I fear that instead of thinking about investing as a huge opportunity to develop businesses that are sustainable over the long term, we’ll be trying to turn investment into more of an ideology, and we don’t need to do that. In fact, that’s a big part of what we hope to do at Engine No. 1 is try to make sure that doesn’t happen.
So what opportunities do you see today when it comes to ESG issues specifically?
Grancio: So ESG issues that we have today that I hope will be more clear in five years is this concept of what does the label mean and making it an ideological topic. So our perspective at Engine No. 1 is that we’re investing for long-term economic value creation. And it’s pretty simple. And that’s what we should be all focused on.
What do you fear you will be reading about ESG issues in five years?Grancio: What I fear we’ll be reading about ESG is ideological and partisan debates being played out in what should be a core investing conversation. And I think if that happens, that’s a real shame for investors.