ENGINE OF CHANGE

Engine No. 1’s first General Counsel, Nate Saint Victor, talks about building the Legal and Compliance team in one of the most influential firms on Wall Street. By Frank McCoy

IN MAY 2021 ENGINE NO. 1 SHOCKED EVERYONE WHEN THE YOUNG investment firm successfully placed three of its nominees on the Exxon Mobil Corporation board of directors. The New York Times wrote that Engine No. 1’s winning strategy “was based on the idea that failing to plan for the impact of climate change could spell the demise of a business” – and ExxonMobil’s largest investors agreed.

As many speculate about what Engine No. 1 will do next, Nate Saint Victor, its recently hired General Counsel and Chief Compliance Officer, has been hard at work building the Legal and Compliance team of what has become one of the more influential firms on Wall Street. Saint Victor, a strategic and innovative leader, is focused on aligning with efforts to diversify corporate legal and compliance departments. In doing so, he may provide a blueprint for others to follow.

Saint Victor says his team will play a critical role in helping Engine No. 1’s business and impact grow as it partners with ethically based clients to execute its Total Value Framework – “a data-driven approach to investing that allows the firm to place a tangible value on the environmental, social and governance (ESG) actions a company takes and then tie those impacts to long-term financial value creation.”

The growth and hiring strategy Saint Victor is implementing involves recruiting the most talented individuals with diverse skills to suit the needs of a growing business. “We must hire and cultivate top talent,” he says. “Our team’s goal is to provide thoughtful evaluation and deliver innovative solutions.”

Born in Brooklyn, New York and raised in Lake Mary, Florida, Saint Victor has had a unique professional trajectory that allowed him to gain a wide range of skills. He says he prepared himself to become a general counsel by taking some strategic risks with his career. The first was deciding to leave Davis Polk & Wardwell after four years and moving to Morgan Stanley to join a mentor from his previous firm.

During his 15 years at Morgan Stanley, Saint Victor served in several roles, including his last as an Executive Director, where he focused on counseling the prime bro-

I ask myself, ‘How do I solve problems and build things?’ The goal is to lift others as you climb so younger lawyers can showcase their talent in their own way” —Nate Saint Victor

LEGAL DEPARTMENTS

Nate Saint Victor

General Counsel, Engine No. 1

kerage, securities lending and fund administration businesses. He also previously counseled the Wealth Management Division on broker-dealer and investment advisory issues, with a focus on alternative investments. Morgan Stanley gave him invaluable broad in-house legal experience and, he says, “a new world of knowledge about retail investment products.”

When Morgan Stanley’s Chief Legal Officer Eric Grossman asked him to chair the Legal and Compliance Division’s Diversity and Inclusion Committee, he viewed it as both an honor and an important career move. He gave up 20% of his portfolio in exchange for the focused pursuit of his goal – to help to increase the recruitment, retention and promotion of diverse talent, as well as driving the implementation of better practices toward advancing diversity, equity and inclusion (DEI) within an in-house Legal and Compliance Division. He was also mindful that relinquishing a portion of his business responsibilities opened up new organizational opportunities and “created spots for colleagues to step up into other positions,” including diverse talent within the division.

Saint Victor saw this move as an opportunity to practice ‘corporate’ civil rights. Over his three years as Chair, he grew membership of the Diversity and Inclusion Committee from 40 to more than 200, creating a broader platform to support authenticity and belonging. During his tenure, the division strengthened its efforts around DEI and was properly recognized for it – with more than 15 awards for the division and its members during that period.

Reflecting on one of the diversity practices he has implemented at his new firm, Engine No. 1, Saint Victor says, “When we hire outside counsel, we negotiate engagement letters that require counsel to share the commitment to DEI and ESG principles.” Next year, this approach will step up a notch as the company will seek to apply metrics to measure this commitment and understand what progress is being made. Saint Victor believes he can hold firms to these standards because there is data tying diversity to beneficial outcomes. He maintains that more investment is needed in consultation with local communities to ensure that there is fairness in hiring and business opportunities.

When it comes to recruiting, he says, “I reject the idea that there isn’t enough diverse talent available. Inequity continues because many companies still hold onto that outdated idea.” Instead of using old practices and methodologies, Saint Victor says new solutions are needed and new questions should be asked about where and how talent is sought out. He quotes Judge Penfield Jackson, who said, “When you discover you are riding a dead horse, the best strategy is to dismount.” Companies should consider diversifying their pipeline by recruiting candidates from not only the top 20 law schools or universities, but across the broader array of higher education, including Historically Black Colleges and Universities (HBCUs). If companies adopt better practices, they will get better results.

Over the long term, Saint Victor says his aspiration is to be a change agent. “I ask myself, ‘How do I solve problems and build things?’ The goal is to lift others as you climb so younger lawyers can showcase their talent in their own way.”

Total Value Framework

The Total Value Framework is a data-driven approach to investing that puts a tangible value on a company’s environmental, social and governance (ESG) impacts and then ties those impacts to long-term financial value creation.

The Total Value Framework seeks to makes sense of the proliferation of ESG data by directly connecting ESG impacts to economic outcome – showing companies and investors how to utilize that data and providing a valuable tool for both capital allocation and investment decisions.

The Total Value Framework was developed by Engine No. 1 in collaboration with Witold J. Henisz, Professor of Management at The Wharton School, the University of Pennsylvania. It integrates reliable, independent ESG data into mainstream financial reporting and attempts to understand and assess how ESG performance affects future valuations. For example, potential changes in regulation, customer or employee preferences, technological disruption, and other relevant factors all contribute to a company’s risk and growth profile.

Armed with that data, Engine No. 1 can focus on how the value delivered to stakeholders affects the value a company delivers to its shareholders. The framework can help drive Engine No. 1’s investment decisions and can help identify actions companies can take on social and environmental issues to possibly increase their shareholder value while enhancing impact over time.

This commitment to change and hiring versatile candidates is exemplified by Engine No. 1’s new (as yet unnamed) Deputy Counsel hire, who will join the legal team in January 2022. Saint Victor explains that this person has a breadth of legal and financial services experience that will help the Legal and Compliance team deliver on its goals. The addition has a broad range of securities law and compliance experience from more than 10 years at the SEC, including time served in the divisions of examination, enforcement and litigation, as well as service in a Commissioner’s office.

It’s not just at Engine No. 1 that Saint Victor is driving change. A Georgetown University Law Center graduate, he says one of his greatest accomplishments is being a mentor for Legal Outreach Inc., an organization that provides law-related courses and activities to prepare and inspire mostly minority, and/or first-generation, New York City youth. He was also a member of the New York City Bar Association board of directors and co-chaired its diversity committee. Community-minded Saint Victor has been a leader within other organizations such as the Council of Urban Professionals, My Brother and Sister’s Keeper, the Alliance of Securities and Financial Educators and the National Association of Minority & Women Owned Law Firms (NAMWOLF).

When reflecting on Engine No. 1’s mission and vision, Saint Victor says, “We want to help the world understand how we think about investments and encourage companies to align their goals with those of employees, customers, communities and the environment.” In sync with this mandate, the firm created an academic advisory board and seeks opportunities to engage publicly traded companies through public-private partnerships.

Saint Victor believes employing the lens of corporate civil rights can help corporations to elevate possibilities for everyone with investment alignment that benefits the companies, their shareholders and their stakeholders, while also creating a sustainable future for the next generations. That is part of what he wants to accomplish at Engine No. 1: “I want to continue to build and grow my Legal and Compliance team to always be mission-oriented and solution-driven.”

These ambitions are not small, but Saint Victor’s track record suggests they are possible: to create a team that has “the innovation and talent to change the world by creating a new framework on how people think about investment.”