Investment

5th generation Rockefeller reckons trees can sustain the family’s wealth

Adam Rockefeller Growald, son of Eileen Rockefeller Growald (the great-granddaughter of the oil tycoon), is hoping to bring the world of financial wizardry into the environmental realm by securitizing trees; and in the process, make living trees more valuable than dead ones.

The company in question is Teratree, which Rockefeller Growald co-founded in early 2020 alongside Alex Gordon-Brander, who designed the FX trading platform at Bridgewater, the world’s largest hedge fund. 

Teratree’s mission is clearly in alignment with the Rockefeller Brothers Fund, the family’s philanthropic arm, whose commitment is to create a more sustainable world

The Rockefellers are one of the most successful family dynasties. Now into its seventh generation, the family had an estimated net worth of $8.4 billion in 2020. 

With its fortunes built on oil after John D. Rockefeller founded the Standard Oil Company in Cleveland, Ohio in 1870, today’s generation of Rockefellers is committed to greener, more sustainable investment activities as it looks to preserve and grow the family’s wealth. 

In a reverse analogy to how John D. Rockefeller systematically extracted one of earth’s most valuable assets, the Teratree initiative will aim to do the opposite: replant a trillion trees and, by consequence, regenerate the health of the planet. 

Teratree, whose funding partners include the Rockefeller Family Fund, says that it hopes to transform the global economy into a force for planetary regeneration 

Using securitization, Teratree will effectively turn the world’s forests into an ecological marketplace for carbon, ecosystem services, and what it refers to as “sustainable and regenerative” commodities. Securitization is a form of financial engineering, which takes illiquid assets, pools them together and converts them into interest-bearing securities. 

The investment capital raised through this process will then be reinvested to fund the ambitious plans to plant a trillion trees. The precise mechanics of how Teratree will approach the securitization process, or who its target investors are, are not known. However, on its website, the company states it will diversify, hedge, and risk manage the forward commodity positions generated by the investment programme, resulting in what it calls liquid, global, low-risk, inflation-protected securities.

Part of Teratree’s approach to scale sustainably involves leveraging military technology, which it does using drones and satellite monitoring. 

Teratree hopes that its model will offer a future path to achieving a global regenerative economy that provides low-cost financing that incentivises local land stewards, while at the same time providing investors with access to an ambitious social and environmental impact strategy.  

On the back of the UN’s Climate Change Conference (‘COP26’), held recently in Glasgow, the role that private capital plays in reducing carbon emissions will be significant.  

On 15th November 2021, the New Scientist magazine wrote that a new Europe-wide study has revealed that annual mortality rates are rising across all major European tree species as a result of soil degradation, reducing their ability to sequester carbon dioxide. 

Afforestation is a theme that is likely to develop deeper roots over the coming years, which could work to Teratree’s advantage.  

With fossil fuels potentially at threat of becoming “stranded assets” over the coming years, making it harder or even illegal for energy companies to extract oil and gas and negatively impacting their market value, the desire to move into cleaner, sustainable investment areas has ramped up among family offices in recent years. 

Rockefeller Brothers Fund director Stephen Heintz was quoted as saying seven years ago that if John D. Rockefeller were alive today, “as an astute businessman looking out to the future, he would be moving out of fossil fuels and investing in clean, renewable energy”. 

Teratree’s mission is clearly in alignment with the Rockefeller Brothers Fund, the family’s philanthropic arm, whose commitment is to create a more sustainable world. 

Rockefeller Growald is also a member of the Next Gen Advisory Council at Rockefeller Capital Management, which has just announced the appointment of Christopher Dupuy and Timothy O’Hara as co-heads of the Rockefeller Global Family Office. Environmental and sustainable investing themes will likely feature high on the agenda, as Dupuy and O’Hara look to grow their relationships with family offices.

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