Abel Leads Berkshire: Can He Sustain $39.9B Green Push?

Key Takeaway

• Greg Abel, named as Warren Buffett's successor at Berkshire Hathaway, brings operational expertise and a strong deal-making background.
• Berkshire Hathaway Energy's $39.9 billion investment in renewables contrasts with legal challenges and criticism over fossil fuel reliance.
• Abel's leadership style, emphasizing collaboration and conservative financial management, is poised to guide Berkshire through its transition.

Succession at Berkshire Hathaway

Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has been a towering figure in the business world for decades. His unique investment strategy, folksy charm, and wisdom have made him one of the most admired business leaders in the United States. However, as Buffett, now 93, gradually steps back from day-to-day operations, the focus has shifted to his successor, Greg Abel. Abel, a Canadian and a long-time executive within Berkshire, has been confirmed as the future leader of the conglomerate. His challenge is to maintain the legacy of a company that has thrived under Buffett's leadership, a task compared to Tim Cook succeeding Steve Jobs at Apple.

Abel, who joined Berkshire in 2000 and was publicly named as CEO-in-waiting by Charlie Munger at the 2021 shareholder meeting, has a strong background in the energy sector. He has been instrumental in leading Berkshire Hathaway Energy and has been praised for his operational expertise and deal-making skills. Abel's approach to business and investments aligns closely with Buffett's, emphasizing the importance of letting Berkshire's companies run themselves and maintaining the conglomerate's financial strength.

Legal and Financial Challenges

Berkshire Hathaway faces several challenges, including legal and financial risks associated with climate change. The company's utility arm, Berkshire Hathaway Energy, has been implicated in costly litigation related to wildfires, with potential damages exceeding $8 billion. This highlights the broader industry-wide risk of reduced profitability or even bankruptcy due to the financial impacts of climate change. Despite these challenges, Berkshire Hathaway Energy has invested $39.9 billion in renewables, showcasing a commitment to the energy transition. However, the pace of retiring coal-fired power stations and recent investments in natural gas have drawn criticism.

Future Leadership and Strategy

The future of Berkshire Hathaway under Greg Abel's leadership will be pivotal as the company navigates the transition to greener energy sources and addresses the legal and financial risks posed by climate change. Abel's operational record and strategic thinking have been highlighted as strengths that could help Berkshire adapt to a rapidly changing business environment. His ability to work collaboratively and build consensus has been noted as a key asset in his leadership style.

Ron Olson, a longtime Berkshire board member, expressed confidence in Abel's understanding of the fundamental principles that have guided Buffett's leadership. Olson emphasized that Abel's commitment to running Berkshire in a conservative manner would protect the company's financial strength. Additionally, Abel's experience in dissecting business balance sheets and his approachable leadership style are seen as qualities that will serve him well as he prepares to lead Berkshire into the future.

Street Views

• Bill Stone, Glenview Trust (Neutral on Berkshire Hathaway):

  "You are coming after the GOAT [greatest of all time]... It doesn’t completely go away when Buffett is gone . . . but you’re starting again."