Another concern for Grantham is the green economy’s surging demand for rare metals needed in batteries and other technologies. His investments there include Lilac Solutions, a startup that aims to find new lithium sources.
Investments in such startups advance the fight against climate change while also, Grantham said, providing the chance for stunning returns. “We expect to have many failures, but when we win, we expect it to be a very big win,” he said.
Grantham’s enthusiasm for startups has influenced his philanthropy. Half of a new $44 million grant program on carbon capture will go for university research on ways of pulling the gas from the atmosphere. To be eligible, technologies must be feasible as businesses soon. If the research pans out, Grantham is prepared to invest in those startups.
Grantham says his “No. 1 job description” is to persuade other rich people to join him. “This is so much more important than building a new building for some business school,” he said.
Richard Lawrence, founder and chairman of Overlook Investments, said Grantham “educated me on climate change slowly over the course of several years.” Grantham would recommend books and bring up particular issues, like agricultural methane emissions, well before Lawrence heard activists discussing them. Among their joint philanthropic projects is Carbon Mapper, a nonprofit that uses satellites to track emissions.
Grantham connects with fellow billionaires through nonprofits like Prime Coalition, which encourages foundations to invest in climate startups, and CREO Syndicate, which encourages the world’s richest families to explore green investing.
Shopify Inc. co-founder Tobias Lutke’s family office, Thistledown, is among the CREO members who have invested alongside Grantham. Lutke, 41, has a net worth of $14 billion, according to the Bloomberg Billionaires Index.
“There are a lot of people who started investing in climate this year,” said Kavita Surana, a professor at University of Maryland’s Center for Global Sustainability. But “we need more investment in research, and into getting research out of the lab and into the world.”
While some areas, like electric vehicles, have no trouble attracting money, she said, less popular, capital-intensive ideas “need people and investors that are able to take on quite a big risk.”
Despite past successes as an investing prophet, Grantham has also been wrong—or at least too early—with some calls. He’s been warning that the U.S. stock market is overvalued for the last couple of years, a period when equity values keep soaring.
Grantham’s green investments could also falter, putting at risk the fortune he’s spent a lifetime building. But, given the dangers of climate change, he argues that’s a chance he and other superwealthy people should be willing to take.
This article was provided by Bloomberg News.