ESG “activist funds” rebranded as “ESG consultants”?

ESG Activists YouTube Thumbnail

Here’s a short note that Sullivan & Cromwell’s Melissa Sawyer:

Setting aside the obvious take away that activists are leveraging ESG theses like climate change to secure board seats, this article also highlights another one of the biggest recent trends in shareholder activism: hedge funds rebranding themselves such that they are not calling themselves activists at all, but rather are “consultants” to public companies.

Here’s an excerpt from that Reuters article that bears out this point:

Named Spring Fund II, the new capital pool would be used to invest in companies with environmental and social problems and help address them, Zlotnicka said on the call. Ubben and his partners at Inclusive Capital fashion themselves as “management consultants with an ownership stake to collaborate with courageous CEOs,” Zlotnicka said, according to the sources. Inclusive Capital plans to amass stakes in roughly 15 companies, while expecting to get board seats on roughly half of them, the sources said.

Inclusive Capital Partners is led by Jeffrey Ubben, who founded & led ValueAct Capital until he left to start this new fund. Inclusive Capital is seeking to raise $8 billion and Ubben clearly has the ESG bona fides unlike other funds that use ESG as a label because it’s trendy.