Engine No. 1, which describes itself as an investment firm that drives performance by tying companies’ social and environmental actions to economic outcomes, has announced the launch of its first thematic ETF, the Engine No. 1 Transform Climate ETF (Ticker: NETZ) with an anchor investment from investment advisory firm Jordan Park.
NETZ is an actively managed fund that aims to invest in companies that will drive and benefit from the energy transition. The fund is focused on holding companies that have a strategy to create value on their path to net zero across multiple industries, including transportation, energy, and agriculture.
“While most climate-focused funds avoid so-called ‘brown’ legacy companies, we believe there is no way to decarbonise the planet without these companies transforming, and there is no time to lose,” says Chris James, Founder of Engine No. 1. “Fewer than 200 companies account for more than 80 per cent of corporate industrial greenhouse gas emissions. There is no path to net zero that doesn’t go directly through those companies. Solving climate change requires the largest investment in capital that the world has ever seen, giving investors the opportunity to play a meaningful and profitable role in transforming companies while also greening the planet.”
NETZ is composed of long-term, high-conviction investments backed by deep company, industry, and market research, the firm writes. The fund looks to invest in companies that have a strategy to create value while working toward net zero. The firm leverages its Total Value Framework to understand which companies create the most long-term economic and societal value through the energy transition. The fund takes a data-driven approach that puts a tangible value on a company’s environmental impact and ties that impact to long-term value creation. The fund’s annual expense ratio is 0.75 per cent.
“As active owners, our goal is to drive transformation at the companies that need it most, including some of the world’s most polluting companies,” says Yasmin Dahya Bilger, Head of ETFs at Engine No. 1. “As investors, we can’t just invest in young tech companies that aim to tackle climate change over a longer time horizon, we need to own and engage with the companies whose transformation will drive change now at scale. Doing so strengthens communities, creates green jobs in the United States, and better serves customers by localising industry.”