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How Extinction Rebellion's British hedge fund backer profits from 'dirty' firms

Sir Chris Hohn has donated £200,000 to Extinction Rebellion

The billionaire helping to bankroll Extinction Rebellion became the world's top hedge fund manager last year thanks to major investments in firms hit by environmental scandals.

Sir Chris Hohn, who has donated £200,000 to the controversial climate change pressure group and is feared in City boardrooms for putting pressure on companies, saw his investment firm join the ranks of the world's largest hedge funds last year after a stunning performance.

TCI Fund Management, which is owned and run by Hohn, added $8.4billion (£6.4billion) in value last year – more than any other major hedge fund according to LCH Investments – taking its assets under management up 39 per cent to $30billion.

But The Mail on Sunday can reveal that the winning streak involved huge bets on companies that have been embroiled in environmental scandals. They include Canada's two biggest rail firms which have been fined in recent years for their failings.

Meanwhile, a US rail company backed by TCI is under investigation over whether it broke environmental laws after cancers in the Houston area were feared to be linked to contamination from the company's rail yard. 

The case has attracted support from activist Erin Brockovich, who was played by Julia Roberts in the eponymous Hollywood movie about her fight for groundwater contamination victims.

Hohn, who had to hand over £337million in Britain's costliest divorce in 2014, last month warned he would vote to eject directors who fail to disclose carbon emissions. He has pocketed more than £800million in dividends from TCI over the past four years. 

Climate change protests: Extinction Rebellion organised mass protests in London last year

Hohn is the biggest individual donor – personally and through his charity – to Extinction Rebellion, which organised mass protests in London last year, and he has argued there is an 'urgent need' to address climate change.

Business leaders from around the world are calling for companies to do more to tackle the climate crisis and the topic became a major focus at last week's World Economic Forum in Davos, Switzerland. Some ethical investors such as the Church of England refuse to invest in companies with poor environmental records.

TCI's disclosures reveal just 15 major holdings. Sources said the fund likes to remain an investor in firms where it believes it can influence bosses to improve their environmental credentials. TCI did not respond to requests for comment on whether it had put pressure on the firms in question.

One of Hohn's major holdings is Canadian National Railway Company, a £52billion giant where TCI has stake of around £1.4billion.

The firm was fined $Can 2.5million in 2017 by the Canadian government after pleading guilty to environmental offences relating to massive spills of diesel into a river. Prosecutors accused it of being 'grossly negligent'. 

In 2005, one of its trains derailed and 10,000 gallons of caustic soda spilled into a river killing at least half a million fish. Shares in the company rose nearly 20 per cent last year. TCI is the largest single investor in Canadian Pacific Railway with an 8 per cent stake worth about £2.2billion.

Shares in the company were up nearly 40 per cent in 2019. Canadian Pacific was fined $Can 31,500 last year for failures related to waste management.

The case has attracted support from activist Erin Brockovich (pictured)

Last month, one of the company's trains derailed spilling more than 300,000 gallons of crude oil. Shares in the company were up nearly 40 per cent in 2019.

Union Pacific, a US rail company in which TCI has a stake worth more than £500million, has also been hit by an environmental furore.

Last month, it emerged that officials in the Houston area are investigating whether Union Pacific broke laws after many cancers were reported near a rail yard where creosote – a possible carcinogen – had been used to treat railway sleepers.

Union Pacific revealed last year that groundwater beneath homes was contaminated with creosote. The company did not acquire the site until after the creosote operations had ceased.

However, local residents last week urged Union Pacific to provide more comprehensive clean-up efforts and compensation for those affected, with Erin Brockovich calling for more 'affirmative answers'.

Shares in Union Pacific rose by nearly a third last year.

Others TCI investments include Raytheon, a £50billion American missiles maker which agreed to pay thousands of dollars to Florida residents over groundwater contamination, and chemicals company Univar Solutions.