Financier donates millions to climate research

The Sunday Times
May 17, 2009
Jeremy Grantham has given British universities £24m in a bid to save the planet, writes Jonathan Leake

SOME might have called it a strange investment. Just as the worst of the credit crunch was hitting home last year Jeremy Grantham decided to bet £12m that economists could save the world.
The British financier, who founded the Boston-based investment fund GMO, which has £55 billion under its management, gave the money to the London School of Economics (LSE) to fund an institute for researching the economics of climate change. A similar amount went to Imperial College London to study climate science.
Altogether, the £24m is one of the largest donations ever made to climate research. It is an area that has so far been spectacularly ignored by other private philanthropists. So why did Yorkshire-born Grantham do it?
“Because climate change is turning into the biggest problem humanity has ever faced. I wanted to invest my money in places where it might actually help tackle that problem,” said the financier last week, speaking exclusively to The Sunday Times about his donation.
The words sound apocalyptic — but who is he? Most of us have not heard of him but in financial circles Grantham, a British émigré, is known for his investment skills.
What he is renowned for, however, is being one of the few big investors to have publicly predicted the collapse of the American and British property markets, and the global credit crunch that followed.
Not many believed him back in 2006 — and even fewer may want to believe his latest predictions. Because Grantham believes climate change could lead to the collapse of Earth’s ecosystems and even threaten human civilisation.
So concerned is Grantham, 70, over this issue that he has set up the Grantham Foundation for the Protection of the Environment, endowed with £165m of his own money, to fund environmental research and campaigns. From it he is funding the LSE and Imperial donations, and other grants to American groups such as the Environmental Defense Fund.
Grantham sees such donations as an investment in the future. He said: “We are destroying the planet. We are in the middle of one of the greatest extinctions of species Earth has seen. If it continues unchecked, humanity will soon be running out of food and water.
“What it means is that the environment, especially climate change, is going to be the central issue for all society, including business, politics and the economy. Capitalism and business are going to have to remodel themselves and adapt to a rapidly changing and eventually very different world.”
Grantham grew up in Yorkshire and went to university in Sheffield before moving to America in 1968 to take an MBA at Harvard. However, his decision to invest some of his foundation’s money in Britain was not a nostalgic one. It followed the publication of Lord Stern’s report on The Economics of Climate Change and it is now Stern who heads the LSE institute.
Those choices are already paying dividends. The LSE’s research seems likely to play a key role in this December’s UN negotiations in Copenhagen where world leaders will seek agreement on cutting greenhouse gases. The work by Imperial, led by the eminent atmospheric scientist Sir Brian Hoskins, will also be crucial.

Why have we got ourselves into this state? And why do we need economists to get us out? After all, they did a pretty bad job by not predicting the credit crunch. Isn’t climate change mainly a scientific issue?
“Humanity is largely innumerate,” said Grantham.
“They don’t understand how frightening the numbers behind climate change really are. What’s more, the people who can count, the scientists, are paralysed with fear about overstating their case. They have consistently understated the risk and so allowed politicians to ignore it.”
Grantham believes that economists like Stern can help translate the science of climate change into practical politics and economic policies.
Some might argue that Grantham would have been better off spending his money on donations to political parties. After all, history has shown how a few million pounds in the right political pockets can buy influence.
Grantham never considered it.
“I don’t approve of that kind of government. It’s very sleazy.”
Instead he put his energy into persuading fellow financiers to support green causes. “In America there are half a dozen hedge-fund managers who have given huge support. We raised £3m for environmental causes in one evening. In the UK it is desperately hard to get money for anything, let alone the environment.”
Professor Cathy Pharoah, co-director of City University’s Centre for Charitable Giving and Philanthropy, suspects climate change is such a big problem that many would-be donors do not know how to donate or who to give to.
“Climate change has yet to become an attractive issue for many donors,” she said.
She also found that the top 50 environment charities had income of £977m in 2007 — less than half the £2.1 billion achieved by the 50 top overseas aid charities, such as Oxfam. The National Trust is the organisation that raises the most money — about £63m a year.
Scientists argue, however, that there is little point donating money to save birds, woodlands or coastline from short-term threats if they are simply going to be wiped out by global warming later on.
Grantham agrees. With three grown-up children and his first grandchild on the way, he sees money spent on climate research as an investment in the world his grandchildren will inherit.
He is, however, increasingly pessimistic about what kind of world that will be.
“Our species is very bad at dealing with issues like these, so the outlook is bleak. There is no alternative to doing all we can but I suspect humanity is going to face a lot of grief.”