Schwarzman Gets a Lump of Coal for Dirty Energy Plants

Buyout barons are no strangers to activist ire, although until now, it’s mostly been from the likes of the SEIU in relation to tax loopholes.

But today Blackstone Group and Steve Schwarzman have been singled out from a new group of protesters. As I type, a New Mexico-based group dressed as Santa and his elves is paying the BX headquarters an unwanted visit.

The reason? Blackstone’s investment in Sithe Global, a coal company the firm acquired 80% of in 2005. Reservoir Capital which retained 20% ownership.

The activists, who hail from New Mexico, planned to deliver a lump of coal to Schwarzman because they oppose Sithe’s plan for three new dirty coal-burning power plants in their region, including one on a Navajo Reservation. The activists oppose the plants, saying they will impact the air quality and health of their communities. They’re calling for Sithe to build renewable energy plants instead. After all, why else did Blackstone form a cleantech group to advise portfolio companies on renewable energy strategies?

The most compelling part of the activist’s message, I think, is the comparison of Blackstone and Schwarzman with the communities being affected by Sithe’s decisions. For example, the per capita income in Mesquite, Nevada, population 9,389, was $20,191 as of the latest census (1999). The median family income was $42,941 in the same year. In contrast, Schwarzman in 2008 earned almost $1.4 billion; Blackstone manages $94.56 billion. It’s not comparing apples to apples (particularly given the years of the data) but it shows the balance of power here. That’s just my take and sadly, I’m not sure how much of a difference the little guy can make in this situation.

What might resonate more with Blackstone and financial types is the activist’s message about returns and strategy. The group writes, “Investors don’t want bad investments surrounded by uncertainty.” It may seem obvious, but if we had more detailed data on why dirty coal is a bad investment surrounded by uncertainty, Blackstone’s LPs might pay attention. And let’s face it, at the end of the day, money talks. Blackstone’s LPs are the only people the firm really has to answer to.