The New York Times recently published an expose of billionaire hedge fund founder Tom Steyer, his new-found commitment to environmentalism, and the inevitable contradictions between his business activities of the not-so-distant past and his current stirrings. The story provides details of the coal mines and power plants in Australia, Indonesia, China and India that Steyer’s company, Farallon Capital Management, has funded and from which the company and Steyer have profited handily. It’s estimated that the mines that received funding from Farallon have increased their annual coal production by 70 million tons, which is more than the annual amount of coal consumed by the United Kingdom. At the same time, profits from those mines have enabled Steyer to commit $100 million this year to defeat political candidates who oppose government actions to slow climate change.
The article provides plentiful opportunities for accusations of hypocrisy and plutocracy. Critics compare leftist Steyer to the Koch brothers in terms of buying political power and influence, and some even go so far as to say that at least the Koch brothers are consistent in their words and actions. Environmentalists find it hard to overlook the damage done in the past, and some of us scratch our heads that it would take such a smart person so long to figure out that coal mines in Asia might not be a great idea.
Why did it take so long? Why, indeed, do any of us persist in behavior that is so clearly damaging? Certain damaging behavior is simply illegal—drunk driving or shoplifting, for example. But the great bulk of actions that cumulatively cause overwhelming damage are culturally acceptable, even condoned, until a tipping point is reached and they become objectionable. Slavery, sweatshops, superfund sites—all have been acceptable until they were not. At the individual level, at what point does a collector become a hoarder? When does fascination become fixation? What distinguishes an obsession from a passion?
Think about it in the context of investing and the very real and raw example of Tom Steyer, who kept on doing damaging things until he finally woke up. Even then, for Steyer it was not a sudden and immediate conversion. Why not? Here is one insight drawn from the story of a huge Australian mine set to begin operations in 2015:
Given Mr. Steyer’s reputation as an active environmentalist, Australian opponents of the mine were startled to learn of his firm’s role as an early investor.
“It’s gobsmacking,” Philip Spark, president of the Northern Inland Council for the Environment, a nonprofit trying to stop construction of the mine, said in a telephone interview. “It’s amazing that such a person could have been involved in this project.”
Mark Carnegie, an investment banker in Australia who was involved in the Maules Creek deal, said he could sense even then that Mr. Steyer was struggling to reconcile his motivations as a profit-seeking investor with his growing anxieties about the environment.
But the investment was financially irresistible.
“But the investment was financially irresistible.”
Irresistible. Like romance, seduction, and sex. The word evokes fantasies and flights of imagination, dreams and wishes, release from the cares of the day. “But the investment was financially irresistible.” It was big and bold. It promised outsized returns from far-flung locations. In the face of the irresistible, long-term damage to the planet and its inhabitants was probably the last thing on his mind, if it even registered at all. Danger, perhaps, but that’s part of the allure. Risk, yes, but only that which he believed could be conquered.
The challenge before us is to be irresistibly drawn to the common good, to simplicity and enough-is-enough, to fairness and justice. We shouldn’t expect to lose our attraction to the irresistible, nor should we want that. But most of us are capable of expanding our consciousnesses such that we can shift from the irresistibility of profit and economic growth at any cost to the shining and irresistible vision of real and good work done well with great joy and compassion.
Tom Steyer, along with Michael Bloomberg and Hank Paulson, has sponsored a report, Risky Business, which illuminates the economic threats to the United States of climate change and urges nonpartisan responses to both the threats and the opportunities. Echoing and building upon the work of millions before them, the report and its sponsors appear to want to make an irresistible case for taking climate change seriously. I hope they succeed.