And yet, within a half-hour, most of the stools had filled up. “There’s a bar here!” a woman said happily. She ordered the gin-based signature cocktail called Husband Daycare and showed off a pair of gloves she’d bought upstairs. She planned to do more shopping after she finished.

“A round of drinks is a second pair of shoes,” says David Bruno, a former buyer for Bergdorf Goodman and now a consultant on the elegant new Goodman’s Bar, tucked into the second floor of the men’s store a few blocks east of Nordstrom. “A bar means people are spending more time within your walls. The more time they spend and the more loose they are, the easier the sale on everyone’s side.”

Goodman’s Bar, which opened in early January, is the newest in a growing number of watering holes inside Manhattan’s higher-end department stores. Nordstrom introduced its Shoe Bar and Broadway Bar when its women’s store opened in late October. Across the street, the men’s store has a café with a similarly strong bar program. Saks Fifth Avenue, which underwent a $250 million renovation in 2019, is home to the Alpine-themed drinks lounge Le Chalet. Across town, inside Hudson Yards, Neiman Marcus has Bar Stanley, which features its own ambitious cocktails.

Destination dining inside luxury department stores is nothing new. Freds has been bringing ladies who lunch and shop into Barneys New York since it opened in 1996. More recently, Tiffany & Co. introduced the Blue Box Cafe, a made-for-social-media stop with robin’s-egg blue upholstered seats and a towering tea service that had hourslong waits. But as Barneys prepares to shutter, and the Blue Box Cafe is closed for two years during Tiffany’s renovation, there’s a previously untapped form of refreshment for sustenance-seeking shoppers in Midtown: cocktails.

An in-store bar has several benefits. Besides the potential for additional purchases and the opportunity to keep shoppers inside a store, alcohol has high margins. Plus, the locations naturally attract customers, said Sucharita Kodali, a retail analyst at Forrester Research. Unlike their suburban counterparts, urban department stores draw a combination of domestic and international tourists, as well as the after-work commuter crowd from Wall Street through Madison Avenue.

“The advantage that these bars can have is that they’re in flagship locations,” Kodali said. “There’s already a lot of traffic, and they’re in department stores that are thriving.” Likewise, stores are now more willing to devote in-house real estate that might have once been reserved for clothing and accessory displays to an area that can serve cocktails.

Nordstrom’s Shoe Bar is straight out of Sex and the City: a curved, stone-topped bar in the thick of the Ted Baker and Jeffrey Campbell display shoes. Thirsty shoppers can order an old-fashioned or signature drinks such as the bourbon-based Billionaire off the menu. Coffee drinks and snacks are available, too.

A lot of the drinking at Shoe Bar takes place among the velvet sofas, where customers try on, say, a pair of Freda Salvador combat boots. And the bartenders stay busy. Vincent Rossetti, vice president for restaurant operations at Nordstrom, said that one in every four transactions at Nordstrom is food or drinks. The Shoe Bar alone sold more than 400 drinks on the Saturday before Christmas.

Down a curved staircase from L’Avenue on the top floor of Saks is Le Chalet. The Philippe Starck-designed bar evokes an Austrian après-ski palace and has a cocktail program that includes unconventional choices such as Baby It’s Cold Outside-gin, Campari, sweet vermouth, and coffee. Hidden farther away from the clothing racks and handbag shelves than its kin at other department stores, it serves more as a hideaway from the bustling city than a shop-till-you-drop pit stop.

Goodman’s Bar sits in an alcove on Bergdorf’s second floor. The art deco space, from the store’s in-house design team, has Tom Dixon wingback chairs, custom backgammon tables, and a bar-to-ceiling mural of Central Park. The beverage program is the most ambitious in a Manhattan store, overseen by master sommelier Dustin Wilson. “It’s no longer enough to put out a shingle and open up a bar,” says Bergdorf’s men’s fashion director, Bruce Pask. “It has to be a destination.”

On Goodman’s menu, alongside the gougères and truffled tagliatelle from chef Austin Johnson, is a short, curated list of wines almost all available by the glass. The bestselling drinks are the grower’s Champagne Dhondt-Grellet and old-fashioneds, which aren’t even on the menu. (The $22 Goodman’s Manhattan also sells well.)

Bergdorf’s is also working on an app that allows customers to order drinks while they peruse Kiton on the second floor. “You’re getting fitted for an evening jacket and have a hankering for an old-fashioned-we trust that our customers can manage both,” Pask said. Nordstrom has even given customers the option to order chicken tacos and martinis while shopping, but Pask doesn’t anticipate delivering food to shoppers at Bergdorf’s. “We’ll keep the gougères and silk ties away from each other,” he says.

Across town, one of the most crowded spots at the three-floor Neiman Marcus is Bar Stanley. On a Friday night before Christmas, all the seats at the bar were filled; the store, not so much. “This feels like the busiest place here,” said a customer, glancing around.

The leather apron-clad bartender responded, “We get that a lot.”

One opponent was so peeved after losing a boardroom battle with Hohn that he titled a book about the experience Invasion of the Locusts. That approach made Hohn’s TCI Fund Management the world’s best-performing, large hedge fund last year.

Now Hohn is bringing his hardball tactics to the fight against global warming. The money manager, with $30 billion in assets, is pushing portfolio companies to dramatically reduce greenhouse gas emissions and disclose their carbon footprint. If they don’t, he says he’ll oust their boards or dump their shares. Just in case anyone doubts his commitment, last fall Hohn and his charity donated £200,000 ($260,000) to Extinction Rebellion, the radical climate change movement whose members have blocked traffic in London and glued themselves to jetliners.

“In the war against fossil fuels, you can’t be super-picky about your allies,” says Jeremy Grantham, co-founder of Boston money manager GMO, a legendary investor who has long warned of climate catastrophe. Hohn “has shown you can make a big impact on companies with a lot of arm-twisting.”

For Hohn, 53, a cerebral and deeply private financier who’s worth $2 billion, his campaign is just a first step in shaking up an asset management industry he says has ignored a planetary crisis. He’s calling on investors to fire money managers who don’t press companies to reduce their carbon footprint, and he wants banks to stop lending to companies that ignore climate change.

Still, for all of Hohn’s zeal, his crusade is fraught with the inconsistencies of green investing. TCI once held a big stake in an Indian coal producer; even now, it owns shares in three railroads that burn tons of diesel and ship fossil fuels, including from oil sands, one of the worst sources of greenhouse gases. Another key holding: Ferrovial SA, the Madrid-based conglomerate that runs airports that include London’s Heathrow.

“On the one hand, he’s trying to be green-and on the other, he makes money out of polluters,” says Jacob Schmidt, chief executive officer of Schmidt Research Partners, a London investment firm. “The question is, how committed are you in actually following your principles?”

Hohn says it’s far more productive to engage with carbon-heavy companies than to ignore them. On Nov. 30, TCI sent letters to the CEOs of the 17 companies in his portfolio with specific instructions on shortcomings that must be fixed. TCI said it will vote against directors of companies that don’t hit its targets, as well as auditors who fail to report “material climate risks,” and it may even sell all its shares in a company.

In a letter to Ferrovial, Hohn acknowledged that “de-carbonizing” airports is a massive challenge and lauded the company’s A grade for disclosing its greenhouse gas emissions. Yet TCI said Ferrovial’s target of cutting emissions almost a third by 2030 could be increased, and he called on the company to support measures such as a carbon tax and a mandate that airlines shift to greener jet fuel.

He told Canadian Pacific Railway that its method of disclosing emissions got a C grade by the nonprofit Carbon Disclosure Project, and that its plan to boost that to a B would still be “unsatisfactory.” TCI, the railroad’s No. 1 stockholder, with an 8% stake, said it requires the company to have a “credible, publicly-disclosed plan” to reduce emissions that meets seven objectives, including offsetting emissions from corporate travel and making facilities more energy efficient. Canadian Pacific says it engages in dialogue with stockholders on topics including sustainability, and that it has long reported its emissions to improve its practices. Hohn declined to be interviewed for this story.

Hohn launched TCI and an affiliated charity, the Children’s Investment Fund Foundation, in 2004 after earning a reputation as a gifted stockpicker in the London office of Perry Capital, a New York-based hedge fund. His wife, Jamie Cooper, whom Hohn met at Harvard in the early ’90s, ran the foundation, and they became a London power couple as TCI pumped money into the charity.

Thanks to Hohn, the foundation has $5.1 billion that it uses to fund programs such as strengthening nutrition for youngsters in deprived communities, protecting adolescents from slavery and human trafficking, and expanding pediatric HIV treatment in Africa. Hohn and Cooper regularly traded notes with Bill and Melinda Gates, and in 2012, David Cameron, then Britain’s prime minister, invited Hohn to speak at a summit on malnutrition at No. 10 Downing Street.

At TCI, the vibe was decidedly more mercenary. Hohn developed an investment strategy predicated on his own “personal, intellectual, and emotional makeup,” as he put it to Justice Jennifer Roberts, who presided over his 2014 divorce, which resulted in a 337 million-pound settlement for Cooper. Hohn’s approach meant conducting meticulous analysis and searching for weak management teams that other investors avoid. “Think of it like the damaged goods department of a department store where you can get 80 to 90% off because most people won’t buy,” Hohn said in a video interview with Institutional Investor magazine in 2013.

When he settles on a target, Hohn takes highly concentrated stakes; a single stock can account for more than 15% of his portfolio. Then he goes to work agitating for changes in the company’s strategy. In 2005, he took a sizable stake in Deutsche Boerse in Frankfurt to stop what he called a “value-destructive acquisition” of the London Stock Exchange. Rebuffed, he called on shareholders to remove CEO Werner Seifert and kill the deal. The board acquiesced, and after Seifert left the company, he characterized Hohn and other shareholder activists as locusts.

Hohn was the catalyst for one of the most disastrous banking deals in memory. In 2007, TCI bought 1% of ABN Amro and started calling for a sale of the Dutch lender. After stockholders supported TCI, ABN Amro was sold to a consortium led by Royal Bank of Scotland Group in the biggest European banking merger ever. TCI pocketed $1 billion, but the global financial crash of 2008 poleaxed the newly combined institution and led to its nationalization by the British government.

TCI has also exploited scandals such as the 2011 crisis at Rupert Murdoch’s News Corp. The company’s U.K. newspapers had hacked mobile telephones and voice mail accounts of celebrities, royals, and a murdered 13-year-old girl. As the media giant’s stock plunged, Hohn purchased almost $1 billion in shares. After News Corp. settled lawsuits in the affair, Murdoch bought back shares and broke up the company. The stock rallied over the next two years, earning a 57% return for TCI-and, for Hohn, reinforcing his reputation as a gifted money manager.

Yet he has suffered defeats that show the limitations of his activism. In 2012, TCI sought to force Coal India, a state-controlled producer, to boost dividends and stop selling super-cheap coal to nearby power plants. But the government had little interest in seeing energy prices rise; in 2014, TCI gave up and bailed out of the stock, which had fallen 19% during the campaign. Four years later, the London Stock Exchange Group Plc spurned Hohn’s demands to oust its chairman and renew the CEO’s contract. After that effort was rebuffed, TCI sold most of its 5% stake in the company, only to see its shares almost double the following year.

Hohn is rolling out his green efforts as the asset management industry struggles to find a way to address climate change while delivering the kind of returns investors demand. Index fund giants have long used an investing style dubbed ESG-based on environmental, social, and governance criteria-but they maintain that investment stewardship is ultimately about maximizing value, not imposing social “values” on companies.

But amid mounting anxiety about record-breaking global temperatures, Larry Fink, chief executive officer of BlackRock Inc., acknowledged on Jan. 14 that climate change has become a “defining factor” in the long-term prospects of companies worldwide. BlackRock, the world’s biggest investment firm, with $7.4 trillion in assets, will start cashing out of firms with “high sustainability-related risk” and plans to make emissions a fundamental consideration in investments.

Tackling global warming will test Hohn’s approach as never before. First, he’s betting that companies will heed his demands, and then that he won’t dampen returns by destabilizing companies that reject them. In tying TCI’s fortunes to a climate change agenda, Hohn is wagering that the economic risks from the mounting crisis are so great that it would be foolish not to spur companies to get real on emissions.

“Green investing and hedge funds are not terms many investors would put in the same sentence,” says Marc de Kloe, a partner at Theta Capital Management in Amsterdam and an investor in TCI’s fund. “However, we have been proponents of the idea that hedge funds are in some way best suited to implement strong green policies, given their unconstrained nature and ability to deploy activist tactics.”

Climate change activists say it’s about time, given the confusion around ESG, which has become a megatrend in the investing world. More than $30 trillion was held in assets classified as sustainable or green in 2018, up more than a third from 2016, according to the Global Sustainable Investment Alliance, a group that tracks money flows.

But critics contend that ESG is often little more than a public relations gimmick to “greenwash” a firm’s credentials. There’s no standard definition of ESG, so it’s virtually impossible to compare companies against a universal benchmark. Moreover, subscribing to the approach doesn’t mean institutional investors will actually pressure portfolio companies to reduce emissions. In November, ShareAction, an advocacy group in London, released a study finding that Capital Group, T. Rowe Price, and BlackRock supported fewer than 7% of the shareholder resolutions on climate risks in 2017 and 2018, even though they all subscribe to ESG.

While it might be odd to look to hedge funds for support in the fight against climate change, that’s where the story is going, says Catherine Howarth, CEO of ShareAction. “Historically, large institutional investors have encouraged companies to do the right thing in vague, bland terms, and the whole asset management field is finally waking up,” Howarth says. “Now we need activist investors like Chris Hohn to push like crazy for what they want.”

U.S. banks are starting to book provisions for potential loan losses under a new system regulators devised eight years ago to avoid the kind of catastrophic surprise that caught the industry and regulators off guard during the financial crisis. The idea is to force banks to boost reserves based on models that factor in the economy, rather than wait for loan payments to stop.

But mighty swings in estimated loan losses in recent years show how the system also has the potential to raise concerns prematurely or to even send mixed signals. When the rule, known in the industry as CECL, was initially written in 2012, regulators and analysts estimated the provision increase for the four largest U.S. banks would be $56 billion. Last week, banks said it’s a mere $10 billion.

That $46 billion gap at JPMorgan Chase, Bank of America, Citigroup and Wells Fargo . shows how economic shifts and the lenders’ assumptions can have a significant impact on estimates — a level of discretion that could allow executives to delay higher reserves or set off a surge in provisions if they are too conservative heading into the next economic slump. It’s also possible assumptions will diverge among firms, leading to confusion.

“We expect higher volatility in provisions under the new rule,” Maria Mazilu, an accounting analyst at Moody’s Investors Service, said in an interview. “We will only find out how good the models at predicting losses are in the next downturn though.”

The rule was prompted by widespread criticism of global banks for being too slow to recognize potential loan losses heading into the 2008 crisis. It’s meant to alert shareholders earlier to any brewing trouble by essentially amplifying expected loan losses based on the stages of the economic cycle.

When it was first proposed, the U.S. was still climbing out of the worst recession since the Great Depression, and projections were grim. Banks have reshaped their lending books over the years. And today, after a long run of economic growth, few in finance are expecting a downturn soon, leaving reserves far lower. Yet all that could change anew when the economy starts heading south.

The old rule allowed less discretion: Banks set aside provisions when borrowers stopped making payments. The new rule requires lenders to model losses from the day a loan is made. Because that standard gives so much more discretion to banks’ internal models, it will decrease comparability among peers, Moody’s has warned.

But if the rule works as envisioned, big banks will head into the next bout of turmoil with larger loan-loss reserves — a buffer in addition to their underlying capital, which has also been increased by post-crisis regulations.

Bank regulators gave firms up to four years to absorb the initial impact on their capital from the accounting rule change. But regulators stopped short of reducing capital requirements to balance out the jump in reserves. That means when reserves do rise further on the risk of a downturn, big banks would need to replenish capital eroded by the hit to earnings.

“If you’re not overcapitalized, then CECL’s impact on reserves will be higher capital,” said Warren Kornfeld, an analyst at Moody’s covering consumer finance companies. “Reserves will go up by x, but capital won’t be allowed to go down by x.”

JPMorgan, Bank of America and Citigroup noted while posting earnings last week that initial implementation will reduce their capital by about 0.2 percentage points.

Wells Fargo lowered its loan-loss provisions because the new rule allowed the bank to write up the value of some collateral backing soured loans. The company didn’t say how much positive impact the reduction would have on its capital.

Smaller banks also have expressed concern about the volatility CECL may cause. And because they lack resources to handle projections internally, some have noted the risk of relying on models and economic forecasts from third parties, such as Moody’s. Community banks and credit unions were given a reprieve last year when their deadline for compliance was extended to 2023. But mid-size banks like Wintrust Financial Corp., Illinois’s biggest publicly traded bank, weren’t included.

“CECL is going to be all over the board on this,” that bank’s chief executive officer, Ed Wehmer, said on his company’s earnings call this week. “And if the guy at Moody’s has a bad day or a hangover or his hemorrhoids act up, he could take the banking business down because everybody’s basically using Moody’s baseline as their basis for this.”