Chris James might seem an unlikely person to become the most prominent ESG investor of 2021.
The founder of Engine No. 1, a small investment firm whose David and Goliath boardroom victory over ExxonMobil stunned the financial world this spring, was born and raised in the coal mining town of Harrisburg, Illinois, where his family and that of his wife — also a native — have long-standing ties to the industry.
When James was growing up, Harrisburg was a vibrant working-class city. But by the time he graduated from high school, he says, “it was kind of falling apart. Not only did you have the environmental impact of a coal mine shutting down, but we had a hat manufacturer close to downtown that employed a lot of people, and that company moved to Mexico.”
James, who has been in the hedge fund world for decades, has traveled far from Harrisburg. But its realities have informed the economics-determined path that he and Engine No. 1 are taking.
The 52-year-old had a plainspoken way of describing the tension surrounding the issue when he spoke with Institutional Investor in August.
“You are concerned about environmental issues after you put food on the table,” a plaid-shirted James told II via Zoom from a log cabin on a ranch in Wyoming, where he had gone for a reunion of his wife’s family — salt-of-the-earth types, descended from coal miners, who still work with their hands. One is a welder for a pipeline.
Such blue-collar workers might be expected to be on the other side of the environmental divide. But although the debate about paychecks — and profits — on one side versus environmental and social change on the other is decades old, James says it doesn’t have to be that way.
“These skills are very transferable,” says James, who once opened a coal mine near his hometown, then sold it as the business suffered.
The downward trajectory of the coal industry could be viewed as, well, the canary in the coal mine for the future of fossil fuels. Yet the notion that saving the planet will hurt the corporate bottom line has kept many hard-nosed institutional investors away from environmental, social, and governance investing. After all, their fiduciary duty is to make the highest return possible — regardless of the cost to society.
To learn how James and his firm Engine No. 1 are trying to change that mindset, read the rest of my profile at Institutional investor.