EPISODE S1E11: INTERVIEW OF Michael o’leary, managing director at Engine No. 1
Michael O’Leary, Managing Director at Engine No.1 is our next guest in conversation with Graham Sinclair on ESG and Coffee Podcast.
PHOTOCREDIT: ESG and Coffee Podcast, 2021.
OUR GUEST in S1E11 is Michael O’Leary, Managing Director at Engine No.1.
I am pleased to welcome to the ESG and Coffee Podcast my next investor guest, Michael O’Leary for a long form interview in our series, “The Originals”. His bio reads “Managing Director @EngineNo_1 and co-author of 'Accountable' — out now from @HarperCollins” and likewise on LinkedIn.
We first met: I first met Michael via Twitter and invited him to be one of our featured speakers when I curated a diversity of talent for GreenFin 21 by GreenBiz with Joel Makower and team (GreenFin 22 is fast approaching produced by Grant Harrison). In April 2021 we could not have Michael talk about the Exxon Mobil campaign because it was still live; instead he made the case for ESG in your 401Ks. Turns out that campaign was…important! I immediately appreciated his open mindset and ability to communicate the work he and his team were trying to do, and the investment implications that follow. Maybe it’s because his Mum is a teacher - teachers rock! Michael was interviewed on Marketplace with Kai Rysdal, and being a decades-long an of the show, I had to start my interview there.
HIGHPOINTS:
Moving ESG into ETFs. Exchange traded funds are an important new technology that allows investment funds to drive down costs, increase transparency and liquidity, and make investment more accessible to more types of investors. Hearing Michael talk about the Transform ETF $VOTE was a highpoint, together with the reasoning about how that will work next to the Engine No.1 hedge fund with its active owner and activist investor approach. I’ve chosen it as one of the investment models for my new class “Making The Sustainable Investing Case” at Harvard Extension School.
Tackling the bigger picture. After working as one of the founding team of the Bain Capital Double Impact Fund, an impact fund led by former Massachusetts Governor Deval Patrick at Bain, Michael made good use of his sabbatical to co-write the book “Accountable” [see my encouragement to read it here]. Michael’s reaction to my observation that I could here the tone of a “candidate O’Leary” on the interview suggested Mr Deval’s path may be a model, a different way to influence the investment ecosystem. Perhaps Michael’s career may want to trace that of Brian Deese for example, moving from government to “Global Head of Sustainable Investing at BlackRock” and back again to government.
Ambition then action. John Sterman, co-founder of the MIT Sloan Sustainability Initiative has said: “aspirations are great. Actions are essential.” Michael and colleagues have the benefit of being 1/1 after their small hedge fund tackled that largest of megacap firms, Exxon Mobil, in 2020/2021. As Michael has said “A year ago, we were a no-name hedge fund. We can now have tons of impact without running a proxy campaign.” In the 2019 proxy season Michael’s data shows that no climate-related proposal passed at a shareholder meeting, then 3 passed in 2020, and in 2021 11 passed.” Climate risk is investment risk, and the investors are moving to act more directly. I appreciated Michael’s detailed responses to my questions on the philosophy and approach they will take.
Reading to understand. I consider every gentleman or lady should be measured by their library, given their life circumstance. So when Michael spoke of being early impressed by Burton Malkiel’s “Random Walk Down Wall Street” and the many books of Jack Bogle (the red one is the better, “The Little Book of Common Sense Investing”), I paid attention. He’s even been interviewed in an impressive looking library, but not on this day. Maybe that’s why he’s young and has a solid book published already, “Accountable.” And maybe like his co-author he’ll have a TED@BCG talk up soon. Words are the reason why the interview ran long. It could have been much longer. I look forward to Michael”s next book on Engine No.1 perhaps?!
Stay after the close for our BONUS TAPE. We talk briefly about
the role of the average person as investor and vote (which reminded me of when I posed that question to Hannah Jones then at Nike Inc. and retold on Trillions xx).
the role of trust for investors and businesses where there is information asymmetry, a topic he covered in his book “Accountable” exploring “restoring trust with accountability”.
the opportunity in Engine No.1 ETF but the risks of greenwashing.
If you enjoy the podcast, please post a 5 star review wherever you enjoyed it. If not please DM me @esgarchitect. Let us know on Twitter @ESGandCoffee what compelling investment humans we should interview, and to stay posted on upcoming episodes.
Thank you for listening.
Host of @ESGandCoffee podcast.
esgandcoffee[at]gmail.com
LINKS
The Atlantic: A Major New Index Fund Should Unnerve Climate-Skeptical CEOs
Bloomberg: Exxon Activist Investor Shakes Up $6.5 Trillion ETF Market
CNBC: Underdog activist Engine No. 1 is launching an ETF after big Exxon win
EDF: New Engine No. 1 ETF builds momentum for climate-aligned proxy voting
Forbes: The Activist Investor That Beat Exxon Is Trying To Reinvent The Index Fund
Morningstar: The Next Generation of Fund Investing
Accountable on Twitter. https://twitter.com/thisismichaelo/status/1328345559065899009?s=20&t=eYyv8_1CYX9c9tDVtXCeUQ
Corporate Accountability Is Missing One Big Thing: Accountability https://www.huffpost.com/entry/corporate-accountability-climate-pledges_n_5ffec2e0c5b63642b7007c27
My Quest for the Best podcast Ep271 https://twitter.com/BillRingle/status/1361324858525761540?s=20&t=eYyv8_1CYX9c9tDVtXCeUQ
NYT https://twitter.com/EngineNo_1/status/1450135088088420357?s=20&t=eYyv8_1CYX9c9tDVtXCeUQ
Impact Alpha. https://twitter.com/ImpactAlpha/status/1437114286745309184?s=20&t=eYyv8_1CYX9c9tDVtXCeUQ
UKSIF. https://twitter.com/UKSIF/status/1484503548683436034?s=20&t=eYyv8_1CYX9c9tDVtXCeUQ
Bloomberg. https://twitter.com/BloombergLive/status/1469015237416271875?s=20&t=eYyv8_1CYX9c9tDVtXCeUQ
Web Summit 2021. https://twitter.com/EngineNo_1/status/1468335760080138241?s=20&t=eYyv8_1CYX9c9tDVtXCeUQ
Rapping ExxonMobil net-zero efforts, activist investor hopes new board members spark change https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/120221-rapping-exxonmobil-net-zero-efforts-activist-investor-hopes-new-board-members-spark-change
3 - Inside ESG: The tiny fund that took on a US giant and won https://www.ft.com/content/fd678864-5833-4ed8-bd56-c26dad4cbcb3
How activist hedge funds went from corporate raiders to climate heroes. Engine No. 1’s defeat of Exxon Mobile was just the start. A new breed of activist investors is pushing companies to embrace stakeholder capitalism. https://www.fastcompany.com/90661929/how-activist-hedge-funds-went-from-corporate-raiders-to-climate-heroes
Exxon: a rebellion investors should back https://www.ft.com/content/48e15f33-a505-4066-abe2-392aebbffb12
Can a Tiny Hedge Fund Push ExxonMobil Towards Sustainability? by Robert G. Eccles and Colin Mayer, January 20, 2021 https://hbr.org/2021/01/can-a-tiny-hedge-fund-push-exxonmobile-towards-sustainability
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