Philanthropist Tom Steyer has cast himself as the progressive billionaire who vows to take on corporate power as he vies to be the next governor of California, but past investments by his former hedge fund have complicated his path to the state’s highest office.

A Bay Area News Group analysis found that San Francisco-based Farallon Capital, which Steyer founded in 1986, invested hundreds of millions of dollars in two industries he now condemns: fossil fuels and private prisons. As he’s surged in the polls, his opponents have attacked those investments in a barrage of campaign ads and during televised debates, forcing Steyer to continue to answer for how the hedge fund invested its money under his leadership.

“He hasn’t held public office before so the thing to criticize him on is his investments and his business interests over the years,” Melinda Jackson, a political science professor at San Jose State University, said. “You can’t point to particular policy decisions he’s made and if you want to critique him that’s where you’re going to go.”

It’s not the first time that Steyer has had to answer for how he accumulated his wealth, which Forbes estimated to be $2.4 billion. It became a key talking point for his adversaries when he launched a short-lived campaign for president in 2020, and has continued to be political fodder for his opponents amid a growing backlash against plutocrats.

The criticism has been further fueled by the large sums of money that Steyer has pumped into his bid to lead the world’s fourth-largest economy, having poured $174 million into his self-funded campaign as of May 11.

Since leaving Farallon in 2012, Steyer has pivoted to philanthropy and climate activism, using his vast wealth to bankroll Democratic causes and touting his own brand of economic populism, in which he refers to himself as a class traitor and asks for the government to “tax me more.”

He told the Bay Area News Group that the past investments in fossil fuels and private prisons “clearly didn’t align with my values,” and helped shape his decision to step away from the business world and focus on a “life of service.”

“Our system is tilted toward the ultra-rich and powerful, and it’s not working for the vast majority of working Californians,” Steyer said in response to written questions. “But what matters is what I’m fighting for: making sure Californians can afford housing, healthcare and a decent life. I’m focused on changing a system that’s benefitting the wealthy special interests while leaving working families behind.”

So what do Farallon’s investments show while Steyer was at the helm?

While the hedge fund’s investments fluctuated over time, the Bay Area News Group analysis found that at the end of 2012, the year of Steyer’s departure, Farallon reported holding more than $421 million in fossil fuel companies, including oil and gas giant BP and pipeline operator Kinder Morgan. The holdings accounted for roughly 10% of the hedge fund’s reported stock portfolio.

The analysis of federal financial disclosures included companies involved in petroleum exploration, production and pipeline transmission, but excluded energy utilities and firms indirectly related to the fossil fuel industry.

In 2004 and 2005, Farallon also invested tens of millions of dollars in Corrections Corp. of America, a private prison operator with dozens of correctional facilities and immigration detention centers nationwide. Farallon’s reported holdings in the company, since renamed CoreCivic, peaked at $89 million in the middle of 2005, before the hedge fund pulled its investments following pressure from students at Yale University, Steyer’s alma mater, over concerns about the treatment of detainees.

Farallon didn’t respond to a request to review the analysis.

But even after Steyer stepped down from Farallon, he reported holding millions in personal investments with the hedge fund, according to tax disclosures made public as part of his bid for governor, even as Farallon continues to invest in fossil fuel companies.

The Steyer campaign told the New York Times that while Steyer recently had $34.7 million invested with Farallon, he has instructed the hedge fund to screen out fossil fuel holdings from his portfolio.

But Steyer’s defense hasn’t stopped his opponents from using it in attack ads or on the debate stage.

Candidates like former Orange County Rep. Katie Porter and San Jose Mayor Matt Mahan, both Democrats, have accused the billionaire of trying to buy his way into the governorship. But Steyer has defended his spending, saying on a recent episode of “Pod Save America” that while money in politics is “completely out of control,” it’s also the way the system currently works.

In response to a recent debate question about how candidates would get more housing built to make it more affordable, Mahan quipped about his rival that “the only housing Tom Steyer’s built has been private prisons and ICE detention centers.”

Despite his investments, Steyer’s candidacy has drawn support from progressive Democrats like state Assemblymember Alex Lee, D-Milpitas, and groups like Our Revolution, an organization founded by co-chairs of Sen. Bernie Sanders’ 2016 presidential campaign, which advocates for progressive candidates and ideas.

Lee, who chairs the legislature’s progressive caucus and was one of the first legislators to endorse Steyer, understands the skepticism around his billionaire status. In an interview, Lee said he doesn’t think billionaires should exist, calling the concentration of wealth a “policy failure.”

But at the same time, he said Steyer has run a “policy forward” campaign, offering a progressive vision for Californians, such as “single-payer” government run healthcare and raising property taxes on corporations.

“I really think in today’s modern-day battle of the titans, basically where we have what I would frankly say is much more conservative far-right billionaires like Elon Musk, we also need to have allies on our own side,” Lee said. “People who are willing to talk about taxing the rich and people who are willing to advocate and use their money for good purposes.”

When asked about Steyer’s past investments, Lee pointed to how Farallon divested in the private prison industry faster than California’s public pensions did and how the Democratic Party still hasn’t divested itself from the fossil fuel industry.

In a video that has recently circulated widely online, former Health Secretary Xavier Becerra, one of the Democratic frontrunners for governor, defended his own decision to take the maximum contribution from Chevron, saying, “I need Chevron.”

“My people of the state of California need Chevron,” he said. “If Chevron wants to give me a check, that’s their prerogative.”

Jackson, the political science professor, said Steyer’s candidacy demonstrates just how much influence money has on politics. Steyer, who was a relatively unknown name to many voters when he jumped into the race last year, has spent tens of millions on digital and TV ads that have helped boost him in the polls.

Steyer has often said that while he’s “the only billionaire on the ballot,” he’s “not the only billionaire in the race.” Mahan has the second-largest amount of financial support in the race, with donors including deep-pocketed tech leaders like Google co-founder Sergey Brin. The San Jose mayor has also received backlash from rivals over having a wealthy donor base.

Jackson said Steyer will likely continue facing criticisms over his wealth, especially as attacks ramp up closer to Election Day.

“It has to do with authenticity,” she said. “Can we really trust this guy? Can we trust what he’s saying now and how is that consistent with his past behavior?”

Philanthropist Tom Steyer has cast himself as the progressive billionaire who vows to take on corporate power as he vies to be the next governor of California, but past investments by his former hedge fund have complicated his path to the state’s highest office.

A Bay Area News Group analysis found that San Francisco-based Farallon Capital, which Steyer founded in 1986, invested hundreds of millions of dollars in two industries he now condemns: fossil fuels and private prisons. As he’s surged in the polls, his opponents have attacked those investments in a barrage of campaign ads and during televised debates, forcing Steyer to continue to answer for how the hedge fund invested its money under his leadership.

“He hasn’t held public office before so the thing to criticize him on is his investments and his business interests over the years,” Melinda Jackson, a political science professor at San Jose State University, said. “You can’t point to particular policy decisions he’s made and if you want to critique him that’s where you’re going to go.”

It’s not the first time that Steyer has had to answer for how he accumulated his wealth, which Forbes estimated to be $2.4 billion. It became a key talking point for his adversaries when he launched a short-lived campaign for president in 2020, and has continued to be political fodder for his opponents amid a growing backlash against plutocrats.

The criticism has been further fueled by the large sums of money that Steyer has pumped into his bid to lead the world’s fourth-largest economy, having poured $174 million into his self-funded campaign as of May 11.

Since leaving Farallon in 2012, Steyer has pivoted to philanthropy and climate activism, using his vast wealth to bankroll Democratic causes and touting his own brand of economic populism, in which he refers to himself as a class traitor and asks for the government to “tax me more.”

He told the Bay Area News Group that the past investments in fossil fuels and private prisons “clearly didn’t align with my values,” and helped shape his decision to step away from the business world and focus on a “life of service.”

“Our system is tilted toward the ultra-rich and powerful, and it’s not working for the vast majority of working Californians,” Steyer said in response to written questions. “But what matters is what I’m fighting for: making sure Californians can afford housing, healthcare and a decent life. I’m focused on changing a system that’s benefitting the wealthy special interests while leaving working families behind.”

So what do Farallon’s investments show while Steyer was at the helm?

While the hedge fund’s investments fluctuated over time, the Bay Area News Group analysis found that at the end of 2012, the year of Steyer’s departure, Farallon reported holding more than $421 million in fossil fuel companies, including oil and gas giant BP and pipeline operator Kinder Morgan. The holdings accounted for roughly 10% of the hedge fund’s reported stock portfolio.

The analysis of federal financial disclosures included companies involved in petroleum exploration, production and pipeline transmission, but excluded energy utilities and firms indirectly related to the fossil fuel industry.

In 2004 and 2005, Farallon also invested tens of millions of dollars in Corrections Corp. of America, a private prison operator with dozens of correctional facilities and immigration detention centers nationwide. Farallon’s reported holdings in the company, since renamed CoreCivic, peaked at $89 million in the middle of 2005, before the hedge fund pulled its investments following pressure from students at Yale University, Steyer’s alma mater, over concerns about the treatment of detainees.

Farallon didn’t respond to a request to review the analysis.

But even after Steyer stepped down from Farallon, he reported holding millions in personal investments with the hedge fund, according to tax disclosures made public as part of his bid for governor, even as Farallon continues to invest in fossil fuel companies.

The Steyer campaign told the New York Times that while Steyer recently had $34.7 million invested with Farallon, he has instructed the hedge fund to screen out fossil fuel holdings from his portfolio.

But Steyer’s defense hasn’t stopped his opponents from using it in attack ads or on the debate stage.

Candidates like former Orange County Rep. Katie Porter and San Jose Mayor Matt Mahan, both Democrats, have accused the billionaire of trying to buy his way into the governorship. But Steyer has defended his spending, saying on a recent episode of “Pod Save America” that while money in politics is “completely out of control,” it’s also the way the system currently works.

In response to a recent debate question about how candidates would get more housing built to make it more affordable, Mahan quipped about his rival that “the only housing Tom Steyer’s built has been private prisons and ICE detention centers.”

Despite his investments, Steyer’s candidacy has drawn support from progressive Democrats like state Assemblymember Alex Lee, D-Milpitas, and groups like Our Revolution, an organization founded by co-chairs of Sen. Bernie Sanders’ 2016 presidential campaign, which advocates for progressive candidates and ideas.

Lee, who chairs the legislature’s progressive caucus and was one of the first legislators to endorse Steyer, understands the skepticism around his billionaire status. In an interview, Lee said he doesn’t think billionaires should exist, calling the concentration of wealth a “policy failure.”

But at the same time, he said Steyer has run a “policy forward” campaign, offering a progressive vision for Californians, such as “single-payer” government run healthcare and raising property taxes on corporations.

“I really think in today’s modern-day battle of the titans, basically where we have what I would frankly say is much more conservative far-right billionaires like Elon Musk, we also need to have allies on our own side,” Lee said. “People who are willing to talk about taxing the rich and people who are willing to advocate and use their money for good purposes.”

When asked about Steyer’s past investments, Lee pointed to how Farallon divested in the private prison industry faster than California’s public pensions did and how the Democratic Party still hasn’t divested itself from the fossil fuel industry.

In a video that has recently circulated widely online, former Health Secretary Xavier Becerra, one of the Democratic frontrunners for governor, defended his own decision to take the maximum contribution from Chevron, saying, “I need Chevron.”

“My people of the state of California need Chevron,” he said. “If Chevron wants to give me a check, that’s their prerogative.”

Jackson, the political science professor, said Steyer’s candidacy demonstrates just how much influence money has on politics. Steyer, who was a relatively unknown name to many voters when he jumped into the race last year, has spent tens of millions on digital and TV ads that have helped boost him in the polls.

Steyer has often said that while he’s “the only billionaire on the ballot,” he’s “not the only billionaire in the race.” Mahan has the second-largest amount of financial support in the race, with donors including deep-pocketed tech leaders like Google co-founder Sergey Brin. The San Jose mayor has also received backlash from rivals over having a wealthy donor base.

Jackson said Steyer will likely continue facing criticisms over his wealth, especially as attacks ramp up closer to Election Day.

“It has to do with authenticity,” she said. “Can we really trust this guy? Can we trust what he’s saying now and how is that consistent with his past behavior?”