The rise of the eco-rich
Andrea Clavarino, 51-year-old president of Assocarboni, the International Association of Coal Operators, is taking some simple steps to help sustain the planet.
He takes a shower rather than a bath in the morning; walks, cycles or uses public transport rather than driving; and resists flushing the toilet whenever possible.
As a wealthy business leader – moreover, one involved in the coal industry -- he regards it as his responsibility to set an example. He is backing the use of clean coal techniques which, in theory, will sequester the carbon dioxide produced by its consumption.
And after a period during which wealth has been associated closely with conspicuous consumption he believes it is time for a different mindset to prevail.
“If you go back a century or two, you will find that wealthy aristocrats were, on the whole, conducting a life that was a sober one,” he said. “What is important about wealth is the independence of ideas it allows, not the material things you have around you.”
Clavarino is far from the only unlikely convert. Billionaire financier Nicholas Berggruen is made a timely sale of his luxury homes to reinvest in agriculture and social projects. “I’m investing in the real world,” he told the Wall Street Journal. “In things that will last for generations and improve people’s lives.”
Our ranking of Europe’s top 40 green moguls reveals that wealthy individuals are frequently at the forefront of promoting sustainability. It may be a little early to call it a trend, but big money is on the move.
The majority continue to be conspicuous consumers, typified by Russian billionaire Roman Ambramovich, owner of Chelsea Football Club and buyer of fine art, but private banks confirm the growing interest in sustainability.
Jeremy Marshall, chief executive of Credit Suisse in the UK, said: “Wealthy people more and more feel their conscience is calling. In the last five years, more of our clients have become interested in philanthropy in general and sustainability in particular.”
Thierry Lombard, managing partner at Swiss private bank Lombard Odier Darier Hentsch, said young people have a passion for sustainability not matched by their parents. The current generation of the Rockefeller family, originally enriched by oil, support environmental charities and campaign for a more sustainable strategy from ExxonMobil.
In Europe, green philanthropists range from members of the Rausing family to Gordon Roddick of Body Shop fame. US hedge fund manager Paul Tudor Jones has bought a 140,000 game reserve in Tanzania, to promote eco-tourism. The Comer Foundation, founded by the late mail order billionaire Gary Comer, has poured money into environmental research, including new technology to remove carbon-dioxide from the atmosphere.
But good intentions and philanthropy can only stretch so far. Ben Goldsmith, who with his brother Zac tops our ranking, warned Wealth Bulletin that environmental philanthropy is chronically under-funded compared to other areas.
If the planet is to be saved from climate change and environmental degradation there has to be an economic and political imperative to act – particularly if the wealthy are to be persuaded to take the lead in promoting sustainability.
The spiralling price of crude oil is making clean energy more competitive and an increasing number of affluent individuals are buying hybrid cars, solar panels and heat pumps. They have realised that governments will increasingly tax, or discourage, projects harming the environment while providing subsidies to sustainable products.
Sarasin is arguably the greenest private bank in Europe. According to Henry Boucher, its deputy chief investment officer: “People used to say being green was good for your conscience but bad for your pocket. That’s not true any more.
I believe returns from sustainable investment will accelerate.” Using data supplied by Trucost, adviser Style Research has discovered that utility, oil and gas stocks producing low carbon emissions have outperformed the rest since the start of 2006.
Pierre Lagrange of hedge fund group GLG Partners said: “Our belief is that that the environment will be as big as the internet in its impact on companies and consumer behaviour.”
Wealthy entrepreneurs are starting to pour money into green opportunities which they view as capable of making a big return. T. Boone Pickens, renowned for his raid on Gulf Oil in the 1980s, is building 2,710 wind farms in Texas, at a potential cost of $10bn.
Shai Aggasi, former executive at German software giant SAP, has struck a deal with Renault and the Israeli government to market electric cars with lithium-iron batteries charged by sun light.
High net worth investor Nick Josefowitz is seeking returns from a solar farm in Italy and landfill project in Guatamela: “I count myself lucky that I can expect to make a profit out of the sustainable projects I believe in,” he said.
The Abu Dhabi government has secured backing from wealthy investors to back its Masdar initiative, designed to make the country a centre for clean energy technology. It has commissioned architect Lord Foster to design an eco-city in the desert sustained by solar power. Venture capitalists in California’s Silicon Valley, led by Vinod Khosla and John Doerr are throwing billions into clean energy and carbon-trading.
A sizeable minority of corporations agree sustainable strategies have a big future. Dupont chief executive Charles Holliday said: “Putting the environment first doesn’t thwart business opportunities, it creates them.” General Electric has invested in a range of clean energy initiatives. Marks & Spencer, HSBC and Wal-Mart are among a range of companies to realise that sustainability enhances their brand.
The bad news is that many companies invest the bare minimum to enhance their credentials – a habit dubbed greenwash by environmental lobby groups. The price of capital-hungry clean-energy stocks was savaged by the credit crisis early this year. Fuel cells have, as yet, failed to achieve lift off.
Merrill Lynch points to the danger of overcapacity in the solar energy sector, which relies on state subsidies. Entrepreneurs have found it harder than they expected to make money out of biofuels, due to soaring crop prices.
Ben Goldsmith reckons the set back will provide bargain basement opportunities for investors. Shares in clean energy stocks have regained ground in recent weeks, following a rise in the price of oil.
But it isn’t always easy, being green.
This is an expanded version of an article appearing in the latest hard copy issue of Wealth Bulletin.
del.icio.us
Digg
Newsvine
reddit
StumbleUpon
