A Climate Activist Wants to Run California. Coal Helped Fuel His Wealth.

Tom Steyer, one of many front-runners within the California governor’s race, has mentioned that he “walked away” from the hedge fund he managed years in the past to “focus full-time on fighting climate change.”

Mr. Steyer did step down because the chief government of Farallon Capital, one of many nation’s largest hedge fund companies, in 2012. But his monetary information present that he by no means absolutely minimize ties with the funding agency he based even because it solidified its function lately as a significant lender to the coal business as mainstream banks confronted environmentalist strain to cease funding coal mining.

Mr. Steyer has turn out to be a number one Democratic contender within the California governor’s race for the reason that sudden withdrawal of Eric Swalwell final month. His wealth, and the way he acquired wealthy, has turn out to be a focus within the race, given rising voter concerns concerning the affect of billionaires.

Mr. Steyer’s marketing campaign says that he has requested Farallon to separate his funds from the corporate’s investments in fossil fuels. But it’s tough to assess the place Mr. Steyer’s sprawling portfolio of hedge funds, non-public fairness and enterprise capital is invested. The public solely will get periodic glimpses into his fortune, which is $2.4 billion, in accordance to a recent Forbes estimate.

His pivot from hedge fund supervisor to progressive activist, notably on the difficulty of local weather change, has been central to his marketing campaign narrative. A variety of progressive teams, together with Our Revolution, based by Bernie Sanders, have backed his candidacy. (“Yes, Tom Steyer is a billionaire,” the organization mentioned, including that “it matters what he is doing with that power.”) In the previous, some progressives have defended him when his coal ties have been highlighted.

Hedge funds handle giant swimming pools of cash for establishments and rich people, they usually sometimes make refined investments of their quest for outsized income. Today, Farallon is among the 20 largest hedge-fund teams, with $44 billion beneath administration, and has expanded into quite a lot of completely different buying and selling methods.

Farallon has invested in coal and financed coal initiatives, going again to when Mr. Steyer ran the corporate.

In the final half decade, Farallon has stepped up its function as a significant lender for the business, notably in Australia, as huge banks scaled again their ties to high-profile coal initiatives amid strain from local weather activists. (Banks nonetheless lend loads of cash to the coal business, and a few, like Bank of America, have reverse course on local weather commitments amid Republican strain.)

Although Mr. Steyer stopped operating Farallon in 2012, disclosures from his 2020 presidential run, which have been filed in 2019, confirmed that his investments within the agency have been then value a minimum of $110 million, and probably way more, for the reason that disclosure types had no higher restrict for the ranges of some investments.

Mr. Steyer’s tax returns from 2021 to 2024, which cumulatively ran greater than 5,100 pages, confirmed that he was nonetheless invested in quite a lot of the agency’s funds. His marketing campaign mentioned Wednesday that his holdings in Farallon have been now value $34.7 million.

“He remains a passive investor,” the marketing campaign mentioned in an announcement. “He employs at Farallon screen out any fossil-fuel-related holdings from his portfolio, and he no longer earns a share of the profits from the fund.”

Mr. Steyer additionally has intensive inexperienced investments, and in 2022, he co-founded a agency referred to as Galvanize that funds inexperienced power initiatives. He additionally banks an advocacy group, NextGen America, that’s lively on local weather change and different progressive points.

Farallon has reaped appreciable rewards by treading the place many banks refused to go. In 2022, it was amongst a small group of hedge funds that charged an 11.5 percent interest rate to the coal producer Stanmore Resources for a five-year mortgage. TO Reuters headline on the time declared, “Farallon and Co put price on coal’s pariah status.”

In 2024, Farallon and one other fund supplied several hundred million dollars to prop up an Australian coal terminal operated by the Adani Group, one of India’s largest conglomerates and a huge user of coal. The undertaking has drawn protracted protests and plenty of banks distanced themselves from the undertaking.

That similar yr, Farallon supplied $150 million for a unique firm, Whitehaven, to purchase two coal mines. The relationship between Farallon and Whitehaven goes back years. In 2009, when Mr. Steyer was nonetheless operating Farallon, the agency prolonged a big mortgage to Whitehaven for a coal undertaking in New South Wales.

“Farallon Capital has bailed out coal mining companies in Australia and enabled the continuation and expansion of coal mining,” Will Van De Pol, chief government of Market Forces, an Australia-based local weather motion group that targets the financing of coal mining, mentioned in an interview. “Anyone closely connected to Farallon and its investment decision-making that claims commitment to climate action needs to be heavily scrutinized for the negative climate impacts of Farallon’s decisions.”

Matt Abularach-Macias, political director of California Environmental Voters, mentioned, “There’s a distinction between Farallon and Tom Steyer’s investment. Their money has been scrutinized time and time again.”

Mr. Abularach-Macias added that Mr. Steyer had “toned up for his past investments and put his money where his mouth is, into clean energy and climate action.” His group has endorsed Mr. Steyer together with a second candidate, Katie Porter, a former Democratic congresswoman. (Back in 2013, the group acquired a $500,000 donation from one in every of Mr. Steyer’s foundations.)

In his 2024 tax returns, Mr. Steyer reported holding a number of Farallon funds, together with an Asia-focused fund that was used for a coal-related deal greater than a decade in the past. His marketing campaign mentioned it was not amongst Mr. Steyer’s present holdings.

“Tom has put in place an investment policy to ensure that he does not directly invest in fossil fuels, payday lending or private prisons,” the marketing campaign mentioned. “To the extent he inadvertently incurs exposure to those industries through third-party managers or illiquid legacy investments, Tom will donate all profits to charity.”

Getting readability on Mr. Steyer’s investments is difficult. Last week, throughout a question-and-answer session after a debate amongst candidates for governor, he was requested if he can be keen to repatriate “some of the money that you have in the Cayman Islands.”

“I don’t have any money in the Cayman Islands,” he replied. “People are making statements that are not true. The truth of the matter is, I pay my California taxes, and I pay every single tax. I have no money overseas.”

But Mr. Steyer’s 2024 tax filings present intensive international holdings, and the phrase “Cayman” seems 19 instances. The information point out he elevated his funding in one in every of his Cayman-based holdings that yr by about $830,000, a small fraction of his whole funding.

Asked to make clear Mr. Steyer’s feedback, his marketing campaign mentioned, “Tom does not personally have accounts in the Cayman Islands or Bermuda,” however does put money into funds that “are domiciled in those jurisdictions; that is the standard legal structure across the private funds space. Tom pays US taxes on all of his earnings.”

Regarding Mr. Steyer’s assertion on Tuesday that he has “no money overseas,” the marketing campaign was requested concerning the lengthy listing of international investments listed on his 2024 tax returns, together with a British checking account value almost $62 million.

“The point he was making is that he pays US taxes on all of his earnings,” his marketing campaign mentioned.

Mr. Steyer and his marketing campaign have mentioned that, as governor, he would work to make house batteries, rooftop photo voltaic panels and EVs extra inexpensive and demand that oil firms pay greater prices. I’ve been to longtime backer of the state’s cap-and-trade program aimed toward offsetting world warming emissions.

Mr. Steyer has attacked different candidates for his or her fossil-fuel ties. He just lately went after one in every of his chief Democratic rivals, Xavier Becerra, a former state legal professional normal and cupboard member within the Biden administration, calling on him to return a $39,200 contribution from Chevron.

A marketing campaign spokesperson, Jonathan Underland, mentioned on Monday that Mr. Becerra was conserving the contribution, and that he took on oil firms when he was state legal professional normal. “Becerra has never been bought by a check, and he has the strongest record of anyone in the race of fighting and winning against fossil fuel companies,” Mr. Underland mentioned.

Mr. Steyer began Farallon in 1986, naming it after a stretch of islands off San Francisco that is still a wildlife refuge.

He had labored beforehand at Goldman Sachs and specialised in merger arbitrage, a buying and selling technique that entails attempting to revenue from the value fluctuations of firms concerned in potential mergers.

Propelled by his hedge-fund fortune, Mr. Steyer has spent $132 million on the governor’s race to date, blanketing the most important media markets with promoting and outspending rivals by about 10 instances. If he reaches the overall election alongside a Republican opponent, he can be a robust favourite to turn out to be the subsequent governor within the closely Democratic state.

California voters might be deciding whether or not to elect a billionaire governor on the similar time they’re voting on a statewide referendum proposing to enhance taxes on California billionaires. The referendum seems to have enough votes to be added to the November poll.

Flooding the market with cash would not at all times work. Meg Whitman, the previous chief government of eBay, spent roughly $144 million of her personal cash on her 2010 marketing campaign as a Republican candidate for governor, or about $220 million when adjusted for inflation. She misplaced.