Investigations into Self-Described “Climate Friendly” Financial Company Could Trip Up Arizona Democrats
Climate activist turned Arizona congressional candidate may have to answer for his company allegedly overinflating green credentials
Arizona Democrat candidates seeking to acquire U.S. House and Senate seats may want to take a hard look at a not so green, green energy company in which they have made sizeable investments.
Either that, or they may be forced to back pedal on climate change initiatives they have publicly supported. Arizona Democrats like Rep. Ruben Gallego, for instance, have proudly touted his support for climate initiatives folded into the so-called Inflation Reduction Act.
On his website, the Democratic congressman claims the legislation will result in “cheaper, more sustainable energy” and that it “will bring thousands of jobs” to Arizona. Gallego has earned the endorsements of progressive environmental groups like the Sierra Club and the League of Conservation Voters in return for voting in line with their policy preferences. Gallego is currently running for the open U.S. Senate seat Kyrsten Sinema, the incumbent Democrat, is vacating.
But from the perspective of his donors and supporters in the environmental movement, there may be a problem. Gallego holds non-public stock in Aspiration, a self-described “climate friendly” online financial company based in Los Angeles, California. So far, so good. But Aspiration has come under investigation for allegedly overstating its green credentials.
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Lofty Goals May Be Fine, But Misleading Figures Are Not
The Department of Justice, and the Commodity Futures Trading Commission are probing into the legitimacy of the company’s carbon offsets to see if it “misled customers,” according to Bloomberg News. Meanwhile, the leftist outlet ProPublica has raised questions about Aspiration’s marketing campaigns, including its tree planting initiative. Apparently, the advertised number of planted trees includes the final number of trees Aspiration pledges to plant.
ProPublica has also focused attention on Aspiration’s internal finances. Even as the company claims to have a positive cash flow in its communications with investors, it falls back on a creative accounting technique known as “Adjusted EBITDAM” to camouflage its expenditures. That stands for “earnings before interest, taxes, depreciation, amortization, and marketing.”
In 2021, Gallego reported holding between $1,001 and $15,000 in Aspiration Redwood Fund, which generated capital gains between $2,051 and $5,000. Although, it appears Gallego sold his shares in the Redwood Fund in 2022.
But the intrigue does not end here. Andrei Cherney, a former Democratic Party chairman in Arizona, and a former White House aide to President Bill Clinton, co-founded Aspiration. Gallego endorsed Cherney’s 2012 House race where he lost out to Sinema in the primary. In April 2023, Cherney announced he will make another run this time for Arizona’s 1st congressional district in the 2024 elections.
Cherney is about as green as they come in the eyes of progressive environmentalists. He has pledged to make Arizona the “solar state” and worked closely with former Vice President Al Gore to “sound the alarm against climate change.” But how does Cherney’s campaign rhetoric square with his company’s investments and performance?
Clean Energy Gets Dirty
Aspiration’s Redwood Fund claims to be fossil free. As part of its investigation, ProPublica found it actually holds more of its assets in companies connected with the fossil fuel industry than it does anything that could be described as a “sustainable” investment.
The fund’s most recent shareholder report filed with the Securities and Exchange Commission shows that it owns shares in companies that either have a significant stake in fossil fuels or explicitly part of the industry. Share of Southwest Airlines, for instance, comprise 3% of the fund. That’s not an insignificant figure since it surpasses the fund’s holdings in sustainable stocks, which make up 2.3% of the portfolio. It’s also worth noting that the airline’s planes and operations together emitted 12.6 tons of greenhouse gases in 2020, according to ProPublica.
Given the hold that environmental advocacy groups have over the Democratic Party in Arizona, and across the country, it would seem unlikely that Gallego and Cherney would suddenly abandon their positions on climate and environment.
Big Green Inc., a project of the Institute for Energy Research, a think tank based in Washington that favors free market policies, shows that left-leaning institutions such as Tides Foundation, the William and Flora Hewlett Foundation, the Rockefeller Foundation, and the Energy Foundation, to name just a few, have pumped substantial grants into Arizona. The grants support progressive environmental causes worth tens of thousands, and in some instances, hundreds of thousands of dollars each. That’s a lot of money and influence to overcome, which means the only way out for the Arizona Democrats may be to distance themselves from Aspiration. For Cherney, especially, this would be a complicated process.
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