(Bloomberg) -- Billionaire Michael Hintze sat in the front row at an invitation-only lecture of the Global Warming Policy Foundation, the main U.K. think tank that’s pushing back against policies to fight climate change.

The London hedge fund manager was listening to former Australian Prime Minister Tony Abbott lament how Western societies had turned global warming into a religion while forgetting their roots in “the scriptures about man created in the image and likeness of god and charged with subduing the earth.” The title of the October 2017 speech: “Daring to Doubt.”

Two years later, Hintze’s $19 billion firm CQS signed up to the world’s largest voluntary set of sustainable investment principles. The firm also pledges to be “aware” of environmental, social and governance factors -- known as ESG -- in its investing decisions and to run its business in a sustainable way. And it’s offering customized ESG portfolios.

“The role and duty of a senior investment officer and portfolio manager is to understand and analyze all sides of any debate,” Hintze, 66, said in an emailed statement. “Successful investing depends on understanding complex issues from multiple perspectives.”

A spokesman for the firm, Michael Rummel, didn’t respond to repeated questions about whether Hintze is a financial supporter of the Global Warming Policy Foundation. Benny Peiser, who co-founded the GWPF with Nigel Lawson, the Chancellor of the Exchequer under Margaret Thatcher, declined to comment on its donors. The Guardian reported in 2012 that Hintze helped fund the group, citing an email exchange it had seen.

‘Red Flag’

Hintze’s move puts a spotlight on the business of sustainable investing, one of the fastest-growing areas in money management. Firms are racing to offer such strategies as climate change and social issues increasingly shape investment decisions, including at the large pension plans and endowments that are key clients of hedge funds.

With trillions of dollars held in sustainable investments, even managers who may be skeptical of the science behind climate change find it hard to ignore the impact of such sums of money on asset prices -- and the business prospects they offer.

“This would be a red flag in my due diligence process,” said Priya Parrish, a managing partner at Chicago-based Impact Engine, which invests in ESG funds. “It would lead me to question their alignment and integrity to ESG objectives.”

At stake is a giant pool of money that’s only getting bigger. While definitions vary, one estimate puts the amount in responsible investments at $30.7 trillion at the start of 2018, an increase of 34% over two years.

Asset managers across the globe have been positioning themselves to tap some of that growth. Around 2,700 firms have signed a United Nations-backed pledge -- known as the Principles for Responsible Investment – to align themselves with global efforts to address climate change, inequality and other social problems.

CQS signed the commitment in July. The application involves a due diligence process by the PRI, but the group doesn’t require general partners of the firms to disclose their charitable and political giving, according to spokesman Duncan Smith.

Rummel, the CQS spokesman, said the hedge fund will seek to “actively engage with companies to promote awareness, transparency and change in relation to responsible climate change actions.” “Our firm-wide mindfulness of climate change goes beyond our investment processes and practices, and is embedded within our company culture and business ethics,” he wrote.

‘Contested Science’

Hintze says on his foundation’s website that he cares “deeply” about the environment and believes global warming is real. He says its “highly likely” that the increase in CO2 is “in part” caused by human activity, thought it’s too simplistic to only focus on carbon dioxide emissions as a cause of environmental damage.

The GWPF has questioned the scientific consensus that humans are responsible for climate change. The group says it’s open-minded on the “contested science of global warming” and “deeply” concerned about the costs and implications of climate change policies.

CO2 is the main driver behind climate change, accounting for about three quarters of all greenhouse gases globally, according to 2016 estimates from the World Resources Institute. Peer-reviewed studies show that climate scientists agree that global warming over the past century is likely caused by humans. Almost 200 countries pledged to limit fossil-fuel pollution that causes climate change as part of the 2015 Paris Agreement. But the costs are high, with Morgan Stanley estimating the world needs to spend $50 trillion on technology over the next decades to halt warming.

‘Big Deal’

The GWPF is one of the most vocal groups in Europe putting into question climate policies. The think tank says on its website that it’s funded mainly by donations from private individuals and charitable trusts and doesn’t accept gifts from energy companies or anyone with a significant interest in them.

As a registered U.K. charity, GWPF isn’t required to say where they get their funding from, and donors aren’t required to disclose who they give to. But in 2012, the Guardian cited an email from Hintze to a climate-change project in which he declined their request for funding and told them that he was “supporting Nigel Lawson’s initiative.” Hintze and CQS declined to comment on the email at the time, according to the Guardian.

In his outlook for 2020, Hintze writes that ESG will be a “big deal” because it will create “valuation dispersion.” CQS has “embedded ESG into our fundamentally-driven investment process, as well as managing ESG accredited mandates,” he wrote.

Hintze started CQS in 1999, and it’s now one of the largest hedge fund firms in Europe. Hintze’s $3.1 billionmulti-strategy CQS Directional Opportunities Fund has gained about 11% this year through November, after losing 3.2% the prior year. It has returned more than 550% since its launch in August 2005, almost seven times the average hedge fund return.

Still, for clients who want to make sure their money goes toward efforts to create a more sustainable world, Hintze’s refusal to clarify whether he backs climate skeptics could become a matter of discussion, said Rob Bauer, a finance professor of responsible investing at Maastricht University in The Netherlands.

“ESG investors are likely to have reservations and need to have conversations with the fund,” Bauer said. “The founder is a key person setting the culture in the firm.”

--With assistance from Emily Chasan and Eric Roston.

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Christian Baumgaertel, Shelley Robinson

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