Above, Sir Christopher Hohn (Credit: Institutional Investor/YouTube)
By Jeff Patch, RealClearInvestigations
January 6, 2020
A global organization called Extinction Rebellion has rapidly risen to become the most disruptive environmental movement on earth. Since its founding in 2018, the collective, abbreviated as XR, has organized an escalating series of anarchical protests across the globe to “halt mass extinction and minimize the risk of social collapse.”
In June, New York police arrested 66 members of the group who were demonstrating outside the New York Times building. In September, the collective claimed that 2,000 of its volunteers “seized” 22 intersections in Washington, D.C., and police arrested 32 in the ensuing gridlock.
A few high-profile Americans—including Rory Kennedy and Aileen Getty—have disclosed their financial support for the group, whose U.S.-based organization claims dozens of affiliates nationwide agitating for “rebellion against the U.S. government for its criminal inaction on the ecological crisis.”
But XR’s largest disclosed individual donor to date is a reclusive British billionaire, Sir Christopher Hohn. “Humanity is aggressively destroying the world with climate change and there is an urgent need for us all to wake up to this fact,” he told The Telegraph recently in confirming his support for the group.
Critics have called XR a cult, citing co-founder Gail Bradbrook’s admission that a bender on psychedelic drugs inspired her epiphany that humanity is at the brink of extinction. Undeterred, Hohn said he had donated £50,000 (about $65,000) to XR personally and a separate £150,000 (roughly $196,000) through the Children’s Investment Fund Foundation, a hybrid charity/hedge fund he founded and operates.
Amid wide alarm about foreign meddling in American politics, Hohn’s support for an organization advocating an uprising against the U.S. government has drawn little notice. Yet court filings and tax records show that he is a billion-dollar non-plastic straw stirring a global network of climate policy influence. He thus illustrates the reach of politically driven philanthropy and the potential of wealthy foreigners to sidestep U.S. lobbying laws by using complex financial arrangements to pursue both civic and self-interested goals. A notable distinction of Hohn’s operation is its apparent investment hedges in both green businesses and fossil fuels that the anticipated “green economy” aims to replace.
Even though air travel is a major contributor to greenhouse gas emissions, Hohn’s fund has major positions in the airplane manufacturer Airbus and in two Spanish companies – Ferrovial and Aena -- which own London’s Heathrow Airport and the London Luton Airport, respectively.
Extinction Rebellion has targeted airports and train stations for protests in recent months.
A self-made billionaire, Hohn’s personal fortune is now estimated at more than $3.1 billion. Born in a London suburb in 1966, the son of a Jamaican émigré mechanic and a legal secretary graduated from Southampton University in England, then earned an MBA at Harvard before going to work for the American hedge fund manager Richard Perry in 1996.
Hohn left Perry Capital in 2003 to start his own hedge fund, The Children’s Investment Fund Management Ltd. -- or TCI as it is known -- which designated a portion of fees and profits to the similarly named foundation, run by his wife at the time, Jamie Cooper-Hohn. When their marriage ended in 2014, a judge ordered Hohn to pay Jamie Cooper $531 million, the largest divorce settlement in British history, opening a window on Hohn’s finances.
By then, his hedge fund had donated a reported $4.5 billion to the foundation for a wide range of organizations working to improve health and safety of children in the developing world.
Its mission shifted in the last decade, when the foundation also donated out more than $440 million in energy and climate change-related grants. It has directed at least $16 million in recent years to groups advocating U.S. climate change litigation targeting traditional energy firms, according to an analysis of grants and other charitable records.
In 2018, the foundation contributed $7 million to climate litigation efforts of the Washington, D.C.-based Center for Climate Integrity, to “initiate, coordinate and support ground-breaking cases in multiple countries.” The center and its parent organization, the Institute for Governance & Sustainable Development, lobbied elected officials in multiple U.S. cities to bring lawsuits against energy companies for causing climate change, according to the Florida Record.
Representatives for XR, Hohn and his affiliated entities declined comment for this article.
The hedge fund manager also has donated millions of dollars of his own money to other global and U.S.-based environmental groups actively opposed to fossil fuels. Last year, Hohn pledged to contribute another $500 million during the next five years.
But his continued investments in industries reliant on fossil fuels have drawn howls of hypocrisy from climate activists. British media disclosed in in October that Hohn has a £630 million stake ($824 million) in Spanish infrastructure conglomerate Ferrovial, which owns London Heathrow airport. XR protesters in Britain recently glued themselves to planes and attempted to shut down a nearby airport, London City.
In fact, Hohn built his wealth in large part by exploiting fossil fuels and natural resources, investments that appear at odds with his foundation’s mission to usher an “urgent global transition to a zero-carbon society.” As late as 2012, nearly half of the assets under management in TCI—a total of about $4 billion—were invested in utilities, mainly fossil fuel producers.
In 2012, TCI acquired a 1% stake, worth about $414 million, in Coal India Ltd., an Indian state-controlled mining and refinery company. The firm produces more than 80% of India’s coal. TCI acquired the stake via two subsidiaries based in tax shelters—TCI Cyprus Holdings and Ireland-based Talos Capital. Ireland’s corporate tax rate is 12.5%, compared with 19% in the U.K.
TCI sued the Indian government and Coal India later that year, alleging that its pricing cost the company almost $19 billion. Records show that as recently as 2014, Hohn’s fund was still invested in Coal India.
TCI managed more than $30 billion in assets as of Nov. 30, making it among the world’s largest activist hedge funds. And despite Hohn’s political engagement, his fund is opaque, with at least nine different subsidiaries, such as TCI Fund Holdings Ltd. and TCI Advisory Services LLP.
Connecticut-based GameChange Capital LLC, incorporated by the foundation in Delaware in 2011, is a private equity firm focused almost solely on acquiring positions in renewable energy firms.
Hohn also owns the unregulated, Cayman Islands-based Children’s Investment Fund Management Ltd. That entity is the parent hedge fund of TCI, according to international regulatory disclosures.
Among left-leaning billionaires, Michael Bloomberg and Tom Steyer are enjoying wide public attention due to their big-spending presidential campaigns. But Hohn, a foreigner unknown to most Americans, arguably exercises comparable if not more influence on U.S. energy and environmental policy through his hedge fund, XR and other advocacy groups.
Complicating things further, Hohn’s operation, though rarely in the headlines, is deeply entwined with progressive philanthropy in America. The New York-based Rockefeller Foundation, which reported $4.3 billion in assets in 2017 and has given millions to environmental causes, maintained a stake worth $156.5 million in one of Hohn’s hedge funds, according to its 2017 IRS filing, up from its $118.8 million stake in 2015.
Hohn’s funds are at the vanguard of activist institutional investors pressuring companies to adopt progressive policy goals. So-called ESG-focused investing (environmental, social, and governance) grew 38% from 2016 to 2018, amounting to $12 trillion of the $46.6 trillion in assets under management in the U.S., according to the Forum for Sustainable and Responsible Investment. That figure is now at roughly $20 trillion.
Hohn’s efforts to influence U.S. laws, politics, and the economy raise deeper questions about the power of global billionaires – specifically whether his American-focused lobbying and public relations campaigns violate the Lobbying Disclosure Act and the Foreign Agents Registration Act. Neither Hohn, his funds nor the Center for Climate Integrity’s executive director, Richard Wiles, registered as a foreign agent under FARA.
A law often honored in the breach but revived by Special Counsel Robert Mueller to secure convictions during his Russia investigation, FARA requires persons acting as agents of foreign principals in the United States to disclose their activities to influence public policy and politics. The obligation to register under FARA is triggered—whether or not a would-be agent is paid—when a person or entity acts as an “agent” of a foreign principal, including foreign governments, political parties, citizens of another country based outside the United States or any company incorporated under the laws of a foreign country. Regulated activities include direct lobbying and public relations efforts, but FARA covers broader activities meant to influence public opinion—academic research, grassroots engagement and organizing protests.
“If a foreign entity is trying to influence American policy, we ought to know about it,” Sen. Charles Grassley (R-Iowa) said in a statement to RealClearInvestigations that did not specifically address Hohn.
Recent public letters from TCI pressured executives at top companies where it holds minority stakes to implement full “de-carbonisation of economies (net zero emissions) by 2050.” The recipients included Google’s parent company Alphabet Inc., Anthem Inc., Charter Communications, Microsoft Corp., Union Pacific Railroad and Univar Solutions—among others.
Some analysts call such efforts by activist investors, including some pension funds, a way to impose policies too unpopular to be passed through legislation and not in shareholders’ interest.
“I’m very skeptical of the notion that [Hohn’s strategy] is shareholder value-driven,” said James R. Copland, director of legal policy at the libertarian Manhattan Institute, whose Proxy Monitor researches ESG shareholder proposals. “They’ll argue that there’s a long-term value, but if hedge funds think they have the right answer on this stuff, then raise a bunch of capital for it and place bets to say that the market is mis-valuing this.”