Bloomberg News

Dumb Question: Does Your Portfolio Have to Match Your Politics?

June 21, 2013

Tom Steyer

Billionaire Tom Steyer of San Francisco retired from Farallon Capital Management at the end of last year to advocate for clean energy and climate change policies. Photographer: Jahi Chikwendiu/The Washington Post via Getty Images

One thing that makes so many people queasy about sustainability is that its advocates don't always put their money where their mouths are. Are corporate pension funds as "green" as executives swear their global manufacturing supply chain is? Are university endowment investments as diverse and inclusive as their freshman classes? Do foundations make investment choices as if it were part of their mission?

Not everyone is in a position to take a stance as strong as Tom Steyer, 55, the San Francisco billionaire who recently retired from Farallon Capital Management LLC. Farallon, the $20 billion hedge fund Steyer founded in 1986, manages university endowments, foundation investments and other assets.

Steyer has become an outspoken opponent of the Keystone XL pipeline, is an Obama supporter and a promoter of advanced energy. He spent $5 million in 2010 defending California's cap-and-trade climate policy in a ballot-measure campaign, and another $35 million on a push last year to close a state tax loophole that benefited non-California companies. Steyer appeared yesterday at a Bloomberg Government breakfast to discuss his opposition to the Keystone pipeline and the Canadian oil sands.

Dumb Question: Is it bad to make money off of companies that do things you're fighting politically? Do you?

Tom Steyer: Basically, the reason I had to leave Farallon was I felt it was inconsistent with what I believe. The normal thing for me to have done at Farallon would have been to stay on in some sort of not-particularly-taxing-but-extremely-lucrative-position [Laughter]. And I'm extremely bummed that didn't happen [More laughter].

I didn't do it because I felt that it was inconsistent. I said, "Look, I understand that Farallon has invested across the board in everything, and a bunch of those things don't really suit me. I want you to get me out of those things. I want you to make that straightforward and clear. And then I want you to offer that to other people who feel the way I do." I really didn't feel as if I was in a position, strangely enough, where I could limit what we were doing to only the things I thought were consistent with my beliefs.

But I can limit what happens with my portfolio to what's consistent with my beliefs. I think that there's going to be a great opportunity for them [Farallon], from a business standpoint, to say we're only going to do things that we feel are quote-unquote right. There will be a lot of endowments and foundations who will think that's a good thing to do.

When I think about what has to happen in the United States of America, I think part of this is personal and part of this is political. People should be trying to green their lives, because it's the right thing to do, including, god forbid, for me. It's important that people who want to advocate do that because I think it is important to be consistent.

Second, it's a political problem, and we have a system for widespread societal change, for disruptive societal change, which has been around for 225 years: democracy. So I'm intent on democracy, and people being allowed to vote their interests.

And that's why we're being such pains in the ass.

Correction: This story has been changed from the original version to remove a transcription error in the second paragraph of Steyer's response.

Transcript edited for length. Analysis and commentary on The Grid are the views of the author and don't necessarily reflect the views of Bloomberg News.

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