Tom Steyer’s staff answers questions about his investments and his career change

Billionaire Tom Steyer, a retired hedge fund executive turned environmental activist who is positioning himself as the left’s answer to the Koch brothers, declined requests for an interview as The Washington Post was preparing an article on his conversion. His staff agreed to respond only to written questions.

Below are some of the questions and answers. The responses were provided to The Post in e-mails from Steyer spokeswoman Heather Wong. The exchanges have been edited slightly for clarity.

Q. How does Tom Steyer square his past decisions to invest in fossil fuels with his current perspective that it is a moral imperative to disinvest from certain energy stocks? Doesn’t that tension have the potential to undercut his role as a messenger on environmental causes?

A. As he has stated before, Tom spent 25 years investing in every sector of the economy. As he discussed — including in the recent debate challenge to the Koch Brothers — he had his version of a “Paul on the road to Damascus” moment and came to the decision that he could no longer in good conscience continue [to] stay at a company that by definition was invested in virtually every sector of the economy. Tom stepped down from his business in 2012 and made a commitment to dedicate himself full time to take action on what he feels is the defining issue for the next generation — and has committed to giving away the bulk of his financial blessings to philanthropy and public interest causes. Here is the Koch Debate Challenge as an fyi.

Has Tom Steyer divested all of his fossil-fuel energy holdings? We may have missed it, but we did not see any sales show up in Securities and Exchange Commission disclosures. Can you point them out to us or explain?

As confirmed by Farallon Capital Management’s current ADV filing with the SEC, Tom does not have an ownership stake in Farallon Capital Management, which reflects the fact that when Tom left Farallon he sold his management stake and directed that his investment holdings be divested from Farallon’s tar-sands and coal-related financial positions. Moreover, since directing Farallon to divest the coal and tar-sands holdings, Tom expanded the divestment directive to include all of his fossil fuel energy holdings and as of this month he will be divested out of fossil fuels all together.

Why did Tom Steyer decide initially to direct that his portfolio be divested only from tar-sands and coal companies — and not all fossil fuels, as he later decided?

Divesting out of all these fossil fuel positions in an 18-month time period by any objective measure is incredibly fast and by definition means that the priority was to get out of positions regardless of the financial implications. Tom publicly identified coal and tar sands as those are the fossil fuels that are having a specific impact on climate and where the battle for our kids is being fought — he then expanded his divestment at the beginning of this year because he felt it was simply the right thing to do.

Tom Steyer has endorsed energy divestment programs of the sort proposed or enacted at Stanford and other academic institutions. What proportion of Farallon’s investments are related to academic institutions? How did the university divestment/disinvestment movement affect him and his business decision-making while at Farallon? Did it have an effect in his thinking about climate change as a top issue? Did it affect his personal investment decisions? How do those divestment standards apply to his own portfolio? Specifically, what is ruled “out” and “in” as “ecologically unsustainable” — oil and coal? Oil, coal, tar sands? Gas? Hydraulic fracturing?

Tom’s fossil fuel divestment screen focuses on companies that mine, explore or produce hydrocarbons usable to generate energy, including but not limited to tar sands, oil, coal, natural gas and companies that operate pipelines that carry tar-sands crude. Per the above — and as Tom has discussed over the last several years — as the science made clear that climate change constitutes an existential crisis for our world, and especially for the world our kids will live in, he came to the conclusion that in good conscience he needed to step aside from being at a fund and commit himself, and his resources, to working to find a solution. Those solutions include various actions, ranging from political activity to supporting AEE’s [Advanced Energy Economy’s] efforts to organize and promote clean-energy jobs to his foundation’s Risky Business project that focuses on the economic impact of climate, to supporting divestment to One Pacific Coast Bank, the community development bank that makes capital accessible to historically underserved communities, to the Too Small To Fail initiative (focusing on supporting children, co-chaired by Secretary [Hillary Rodham] Clinton), and extensive charitable giving through TomKat Charitable Trust. Tom has talked about the moral standing universities and colleges can have when they stand up on issues. You may have it, but here is Tom’s letter to Middlebury College.

Tom Steyer has said his investments need to be wound down. We note that in some hedge funds, it can take a decade or more to wind down a top executive’s holdings and assure a payout commensurate with the executive’s role in the firm. What is the status of Tom’s wind-down? Does it apply to his retirement and other payout agreements with Farallon? Does he receive management fees or incentive compensation such as carried interest?

Tom sold his management stake and has retained an investment relationship with Farallon comprised of his fossil-fuel-free investment holdings. After resigning on 12/31/12, Tom was no longer entitled to and does not receive any management fees or incentive compensation. [Incentive compensation is carried interest.]

We note that Farallon has recently held a stake in a number of oil, gas and pipeline companies, including a large investment in Kinder Morgan, an oil and gas pipeline outfit that plans to expand its own Trans Mountain pipeline to transport oil from Alberta to refineries and shipping terminals in the U.S. and Canada. Did Tom Steyer personally approve or review that investment while at Farallon? Does Steyer now favor or oppose the Trans Mountain pipeline? In mid-2013, Steyer said his divestment of Kinder Morgan investments would be complete by the end of the year. Did that happen? Can you show us evidence of the sale?

As Tom said in his letter to Senator [David] Vitter [of Louisiana] he would donate 100% of his personal profits from Farallon Capital’s investments in Kinder Morgan. As can be found in Farallon’s SEC Form 13-F filings, Farallon has completely divested itself of its Kinder Morgan holdings and Tom’s personal profits — valued at around $1.7 million — are being placed in a fund to assist the victims of wildfires.

Carol D. Leonnig and Rosalind S. Helderman contributed to this report.

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