National Post (National Edition)
The secret club for billionaires who care about climate change
Afew years ago, the hundreds of members of France's Mulliez family, with a global retail empire worth more than US$38 billion, decided they should take climate change more seriously — or rather, their investment portfolio should.
But where to start? Climate change and the fight against it could transform almost every sector of the economy as companies clamour for ways to cut emissions and even pull carbon dioxide from the air. “This space is very broad, and it's complicated,” says Delphine Descamps, managing director at Creadev, the Mulliez family office, which has about 200 million euros (US$236 million) to invest each year.
Then she met Régine Clément, the head of a small, secretive non-profit called Creo Syndicate. An exclusive club of climate-focused investors, Creo's mission is to speed up the flow of capital into investments that can slow global warming. The group focuses on the richest of the rich, working with about 200 families and investment outfits with a total of more than US$800 billion under management. Prominent members include legendary investor Jeremy Grantham and Nat Simons, the son of Renaissance Technologies' billionaire founder James Simons. Members must pay dues — a “very reasonable” flat fee, Clément says, that makes up about half the nonprofit's revenue — and they must prove they're serious by planning to make their first investment in climate and sustainability within six months. Members must also have assets of at least US$100 million and get approved by the nonprofit's board.
When the Mulliez family joined, its staff met with experts, experienced climate-focused investors, and other family offices, who were surprisingly candid about what they'd learned. At online seminars and in-person meetings with carefully selected groups, often with fewer than 20 people, they discussed innovations in agriculture and other areas that may cut emissions while feeding a growing population. “People openly talk about their investments and what worked and what didn't work,” she says.
Although it's a nonprofit and doesn't have any money of its own to deploy, Creo acts a little like an investment bank, vetting about 300 deals per year, connecting investors with possible partners, and conducting research on technologies. Members have invested in everything from batteries and hydrogen fuel to regenerative farmland and greener product packaging. Portfolios include still unproven technologies such as methods for carbon capture and true long shots like fusion reactors.
Creo members make a wide variety of bets that might make a difference — and make money. “This is not philanthropy, this is investment,” Clément says. Superwealthy families, she says, have an advantage over other players: Managing money for future generations, they can afford to wait a decade or more for investments to bear fruit. Some members in Europe have been rich for hundreds of years. Families “are naturally inclined to think long term,” she says.
Many of the investments aren't mainstream, but “it's fine, because these families are comfortable being pioneers,” says Spring Lane Capital managing director Christian Zabbal, who co-chairs Creo's board. “What Creo is doing today is essentially a preview of what institutional capital will do very shortly.”
The Mulliez family owns a giant supermarket chain, Auchan — basically France's answer to Walmart. Their conversations with other Creo members led to a decision to concentrate on food in their climate-focused portfolio. Agriculture accounts for about 10 per cent of global greenhouse gas emissions, and better farming practices could fight climate change by both reducing pollution and sequestering more carbon in soils. Sustainable forms of aquaculture, meanwhile, could satisfy demand for protein with far less pollution than other kinds of meat. The family invested in Gotham Greens, an indoor urban farming company, and two companies involved in aquaculture: Kingfish Zeeland, which runs hightech fish farms, and InnovaFeed, which raises insects as feed for farm-raised seafood.
This year the Mulliez family office led a fundraising round for Hungry Harvest, a startup that sends consumers weekly boxes of produce. When Descamps asked Creo if it knew of any other mission-driven investors looking for deals focused on reducing food waste, she was introduced to Quadia, a Geneva-based impact investor that helped close the US$13.7 million investment round in September.
Creo's families want to “be at the front of the parade,” says Jason Scott, a board co-chair. He bristles when people suggest climate-focused investing is becoming a bubble. “You're talking about changing the way food is grown and transported and what people eat, how energy is delivered to people's homes, what people drive, the way people build cities,” he says. “You're talking about a complete reconfiguration of the global economy.”
When Creo was formed five years ago from the merger of two climate-focused investor networks, it was just an informal gathering for like-minded families. “People would throw down their credit cards for dinner. It was pretty low-rent,” Scott says. Clément became Creo's founding chief executive o in 2016. “She's turned it into a powerful platform,” Scott says. “There's almost an insatiable demand for the kind of support Creo is providing.”
In four years, the nonprofit's membership has quadrupled, and its members and affiliates' assets have risen eightfold, from less than US$100 billion in 2016. To keep up with the demand, Creo's staff has doubled in the past year, to 10 in the U.S. and two in the U.K. The group doesn't go out and recruit members. “We grow entirely through introductions. We never seek out a family,” Clément says. Although Creo doesn't require applicants to divest from fossil fuels or other emitters, she wants to make sure all members are fully committed to the mission. Part of building trust with wealthy families is keeping their secrets. In addition to Grantham and Simons, the group's ranks include other well-known billionaires whose names Creo won't disclose. A mantra is “no tourists allowed.”
The key to Creo's success, members say, is how it gets very wealthy investors in the same room — or on the same Zoom call. “You have people with a decade of experience and people with a month of experience,” says longtime member Reuben Munger, a hedge fund manager who founded Vision Ridge Partners as his family office and later turned it into an investment firm. With more than US$1 billion under management, it specializes in sustainable assets.
It helps that families generally aren't trying to pitch to each other and that Creo makes no fees on any deals. “There's not a lot of hidden agendas,” Zabbal says. Creo has tried to unlock even more capital by venturing beyond families to large institutional investors that also want a head start on climate investing. The non-profit is working with CDPQ, a Quebec pension fund with US$333 billion in assets, which launched a US$500 million investment strategy around climate and sustainability. The pension's goal is to invest alongside families or firms in late-stage venture companies. The first deal, announced in September, is with S2G Ventures, a Chicago firm focused on food and agriculture that's backed by Lukas Walton. An heir to the Walmart fortune, he has a net worth estimated to be more than US$22 billion by the Bloomberg Billionaires Index.
Creo members have seen their investments pay off. QuantumScape Corp., a battery tech company recently valued at US$3.3 billion, received early funding from Prelude Ventures — co-founded by Simons — and Capricorn Investment Group, both Creo members. Participants in the non-profit also invested in early rounds of Tesla Inc. and Beyond Meat, two of 2020's best-performing stocks. This kind of success helps convince skeptical family members and advisers of what Creo can do.
“The opportunities are tremendous, but it's also overwhelming for someone who starts out,” Zabbal says. “By investing in collaboration with others who bring expertise, it allows more investors to take the leap.”