San Francisco billionaire Tom Steyer is a leading financial backer of environmental causes, campaigning heavily against the Keystone XL pipeline, fracking, and coal development. He left the hedge fund he founded (Farallon Capital Management) in October 2012, asking it to vest his holdings in fossil fuel interests following a self-described awakening to the threat they pose.
What Steyer didn’t mention is that his fossil fuel investments had already helped him amass a billion dollar fortune.
According to Reuters, under Steyer’s watch, Farallon built up more than $2 billion worth of coal interests in Indonesia and Australia, contributing to the rapid development of coal production in both countries. Profits from these investments made his fund one of the world’s biggest and him one of the world’s richest individuals.
In Indonesia, he financed the country’s second and fifth largest coal producers, ramping up their production some 60 percent over the next few years. According to David Price, a senior coal analyst at the consultancy IHS, these investments were key to raising Indonesia’s coal production, which increased four-fold between 2002 and 2012, making it the largest coal exporter in the world.
In Australia, he made Farallon the largest shareholder of Whitehaven Coal, which is developing Maules Creek, one of the country’s largest remaining coal reserves. Due to start production in 2015, environmentalists are crying foul over the potential impact on the environment.
Thanks to big production increases and skyrocketing coal prices, Steyer, Farallon, and its clients generated a huge return on investment. This capital helped Farallon amass a $19 billion portfolio, nine percent of which is still invested in energy according to its regulatory filings. A former Farallon investor says that Steyer’s investment principles were consistent with most financiers: [H]is attitude has always been ‘whatever it will take to make money.’”
Steyer’s energy investments brought much needed jobs and economic development to often blighted regions around the world, raising the standard of living for millions. For this, he was deservedly well-compensated. But now, he is running away from this legacy, using the money he earned from it to prevent further increases in living standards and the next fortune from being made. Such hypocrisy is galling.