Engine No. 1 Shows Activist Hedge Funds Can Be Allies In Climate Activism Fight AOC Sustainability

By Mark DesJardine, Assistant Professor of Strategy and Sustainability, Penn State; and Tima Bansal, Canada Research Chair in Business Sustainability, Western University. First published on The Conversation.

One of the most expensive Wall Street shareholder battles on record could signal a big shift in how hedge funds and other investors view sustainability.

Exxon Mobil Corp. has been fending off a so-called proxy fight from a hedge fund known as Engine No. 1, which blames the energy giant’s poor performance in recent years on its failure to transition to a “decarbonizing world.” In a May 26, 2021 vote, Exxon shareholders approved at least two of the four board members Engine No. 1 nominated, dealing a major blow to the oil company. The vote is ongoing, and more of the hedge fund’s nominees may also soon be appointed.

While its focus has been on shareholder value, Engine No. 1 says it was also doing this to save the planet from the ravages of climate change. It has been pushing for a commitment from Exxon to carbon neutrality by 2050.

As business sustainability scholars, we can’t recall another time that an energy company’s shareholder – particularly a hedge fund – has been so effective and forceful in showing how a company’s failure to take on climate change has eroded shareholder value. That’s why we believe this vote marks a turning point for investors, who are well placed to nudge companies toward more sustainable business practices.

Update June 2, 2021: Exxon Board to Get a Third Activist Pushing Cleaner Energy

Apple Leads First-Ever $200 Million Climate Change Restore Fund With Partners AOC Sustainability

Apple announced in April announced a first-of-its-kind carbon removal initiative — called the Restore Fund — that will make investments in forestry projects to remove carbon from the atmosphere while generating a financial return for investors. Launched with Conservation International and Goldman Sachs, Apple’s $200 million fund aims to remove at least 1 million metric tons of carbon dioxide annually from the atmosphere, equivalent to the amount of fuel used by over 200,000 passenger vehicles, while demonstrating a viable financial model that can help scale up investment in forest restoration.

This effort is part of Apple’s broader goal to become carbon neutral across its entire value chain by 2030. While the company will directly eliminate 75 percent of emissions for its supply chain and products by 2030, the fund will help address the remaining 25 percent of Apple’s emissions by removing carbon from the atmosphere. Trees absorb carbon as they grow, with researchers estimating that tropical forests hold more carbon than humanity has emitted over the past 30 years from burning coal, oil, and natural gas, despite ongoing deforestation. The partnership aims to unlock the potential of this natural solution by scaling it in a way that makes it attractive to businesses.