ImpactAlpha, Sept. 18 – Oil giant BP this week called Peak Oil. Ubben, a veteran hedge fund manager, is calling Peak Finance. “Finance is, like, done,” he told the FT back in June. Ubben was known as an activist investor at ValueAct, the $16 billion hedge fund he founded in 2000. That meant pushing companies to make short-term decisions to increase profits, fire workers and buy back shares. At Inclusive Capital, which he founded with Lynn Forester de Rothschild of the Coalition for Inclusive Capitalism, he’s a different kind of activist. He’s pushing companies in oil, gas and other sectors to transition, quickly, to socially beneficial business models. “We’re trying to change the system,” he says. Fixing or mitigating climate change is “the next huge break-out opportunity,” he said at this week’s Bloomberg Green Festival. Ubben began scooping up shares of BP as soon as CEO Bernard Looney laid out ambitious decarbonization goals. Inclusive has stakes in AES, the power company, and Nikola, the electric truck maker (Ubben defends Nikola’s hydrogen-fuel plans, but admits he pushed the company to go public too early).
An investor like Ubben launching a “return-driven environmental and social activist firm” may make some institutional investors more comfortable with impact investing. But his brash style may also make some environmental, social and governance, or ESG, investors less comfortable. “ESG does not create change, (though) it may make people feel good and may be a great way to grow your asset management business,” he said. Getting big polluters to cut emissions is a more direct path to climate-change mitigation, he says. “It requires an activist investor.” Ubben’s bet on Inclusive Capital reflects his clear-eyed assessment of where markets – and investors – are headed. Some old-timers point out that Ubben is a Johnny–come–lately to impact investing. At 59 years old, he doesn’t disagree. “I’m on a crusade,” he says. “I’ve got five years to fix the harm I’ve done.”