Wednesday, March 16, 2011
Shari Arison Shares Her Green Vision
Israel's richest woman has been mocked for her spirituality, but her new book lays out a credo for sustainable business that could win converts
Israel's wealthiest woman, Shari Arison, is an accidental billionaire. She inherited her fortune from her late father, Israeli-born Ted Arison, who founded Carnival Cruise Lines (CCL) and in the 1990s also became a major investor in the Jewish nation.
While her father was still alive, the now 52-year-old heiress stayed largely out of the limelight and ran the family philanthropic foundation, while her older brother, Micky Arison, took charge at Miami-based Carnival. But all that changed abruptly in 1999, when her father died and she inherited his Israeli empire and a large chunk of Carnival. With little or no business background, Arison was forced to grapple with how to manage her local holdings.
At first, she contemplated disposing of everything. But instead, Arison decided to focus her attention on the two largest assets in the estate: Bank Hapoalim (POLI.TA), now Israel's second-largest financial institution; and Housing & Construction Holding (SKBN.TA), the country's biggest construction firm. The rest was sold off in pieces.
In recent years the local media have had a field day reporting on Arison's business and personal life—and the coverage has rarely been complimentary. Aside from her vast wealth (her net worth is estimated at $2.7 billion) and philanthropy, Arison is deeply spiritual and says she can see into the future. Among the "messages" she claims to have received were premonitions about Hurricane Katrina, the Indian Ocean tsunami, and the global economic crisis.
"The Right to Hear Voices"
Last summer, Arison published a book in Israel in which she described her spiritual journey and laid out a vision for how to save the planet. When the Hebrew edition came out, it raised more than a few eyebrows. Critics questioned whether Arison should be allowed to have such vast economic influence. Motti Kirshenbaum, a popular television commentator, quipped at the time that "everyone has the right to hear voices, but I don't want it to be the owner of the bank where my money is."
But Arison is undaunted, and this week the English-language version of her book, called Birth: When the Spiritual and the Material Come Together, is being released in the U.S. Arison's credo, as she details in the book, involves a new, more sustainable model for individuals and businesses. "Sustainability is the key to our survival on this planet and will also determine success on all levels," she says in an interview with BusinessWeek.
Put simply, Arison believes it's possible for businesses to succeed while benefitting their surroundings, and that economies can thrive if they take the environment into consideration. To give credence to her message, Arison is applying the ideals to her own life: She sold off mega-rich trappings such as her personal jet and yacht, switched to a hybrid automobile, and ordered a retrofit of her palatial home to make it more environmentally friendly. She also donates tens of millions of dollars every year to a long list of hospitals and arts organizations, and sponsors Israel's annual "Good Deeds Day."
The increased attention Arison is likely to receive from the U.S. book may only heighten concerns about her business ties. But Israel's strict banking regulations make it difficult for Arison—who is not on the management team or board—to have much impact at Bank Hapoalim, other than on its image.
She found this out the hard way last summer when she got into a public spat with Stanley Fischer, the governor of the central Bank of Israel, who was trying to force the resignation of Bank Hapoalim Chairman Danny Dankner over allegations of conflict of interest. Eventually, Arison was forced to back down and remove Dankner as chairman.
But she has managed to wield some influence at the bank, supporting management efforts to offer low-cost loans for solar energy projects and a series of popular financial planning seminars for customers. Such moves have earned praise from observers. "Bank Hapoalim has to be commended for taking the lead in these fields," says Yuval Ben Zeev, head of research at Clal Finance (CLFN.TA), a Tel Aviv investment firm. But Zeev questions whether Arison could, for instance, prevent the bank from making loans to companies that she believed were responsible for causing environmental damage.
Her influence at Housing & Construction is more clear-cut. "Within five years it will be a 100%-green company," Arison says. The construction giant is already taking steps in that direction, planning and building Israel's first "green" neighborhoods in Netanya and Kfar Saba, as well as a large shopping mall in Beer Sheba that takes into account the city's desert conditions. The process of making Housing & Construction green is being overseen by a new vice-president for sustainability and design—a one-of-a-kind position in Israel and possibly elsewhere in the world.
Perhaps the most successful and visible example of Arison's business vision is her first startup venture, a Luxembourg company called Miya that she launched in 2006 and has underwritten with $100 million of her own money. Miya is a consulting and audit company that advises municipal water utilities on how to reduce leakage from underground pipes. It's a far more serious problem than many people realize: The firm estimates one-third of the world's drinking water is wasted via leaks in aging pipes, costing utilities worldwide $18 billion per year. In many major cities, such as Chicago and São Paulo, the percentage of losses is even higher.
Global Water Player
"Everyone talks these days of scarcity, but there could actually be abundance if there was greater efficiency," says Arison, who chose the moniker Miya because it contains the Hebrew word for water and is also an acronym for one of God's names in the Old Testament. The company has already acquired a number of other water-management firms, and Arison says she thinks it's on the path to becoming a major player in the global water industry.
What's next for the quirky billionaire? Arison would like to turn her attention to the fields of clean energy and clean air. Housing & Construction has already launched a solar energy unit and tried last month to buy Israel's Solel Solar Systems, but was outbid by Germany's Siemens (SI). And, of course, she'll be busy supporting the U.S. edition of her book.
Israelis don't quite know what to make of Arison, whom they view with a mixture of fascination, ridicule, and some affection. Now, as she takes her message to a much wider audience in the U.S., it remains to be seen whether Americans will embrace Arison's business and environmental message—or write her off as a wealthy eccentric.