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January 12, 2007

Gates Foundation Revokes Pledge to Review Investments

After the LA Times reported that the Gates Foundation often invests in companies hurting the very communities Bill and Melinda want to help, the Seattle Times reported the foundation planned "a systematic review of its investments to determine whether it should pull its money out of companies that are doing harm to society".

Shortly after that interview, the Gates Foundation took down their public statement on this and replaced it with an apparently altered version which seems to say that investing responsibly would just be too complex for them and that they need to focus on their core mission:

There are dozens of factors that could be considered, almost all of which are outside the foundation’s areas of expertise. The issues involved are quite complex...Which social and political issues should be on the list? ... Many of the companies mentioned in the Los Angeles Times articles, such as Ford, Kraft, Fannie Mae, Nestle, and General Electric, do a lot of work that some people like, as well as work that some people do not like. Some activities might even be viewed positively by some people and negatively by others.

Way to take a stand.

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Posted by Jeff on January 12, 2007 at 12:24 AM in The Politics of Business | Permalink


The Gates Foundation response is pitiful. Socially Responsible Investing 101: you create a set of screens that guide you to avoid the worst of the worst. Most SRI investors avoid tobacco and firearms, for example. Many also avoid corporations that treat their employees badly. I hounded my family to sell Wal-Mart. Evidently, so did a lot of people because their stock lagged pretty badly last year. It turns out that companies that do good, such as Costco, also do well and are good investments. SRI funds have beaten the S&P;, and foundation boards can no longer plead "fiduciary responsibility" as a reason for not using SRI screens. SRI fund managers also vote their shares along with shareholders hoping to shape up corporations to be more responsible, and the Gates billions would certainly be felt in the boardrooms of America. It seems that they're running out of excuses.

Posted by: Sarajane46th | Jan 12, 2007 3:48:14 AM

The excuses are really too much. It's not that hard to engage in SRI, as there are many financial advisors who have devoted the entirety of their businesses to advising only for screened companies. But here's the pathetic rationale that Cheryl Scott, Chief Operating Officer of the Gates Foundation, expects us to fall for:

But it's difficult, Scott said, for any investor to keep abreast of a company's actions.

"When you say I'm going to invest in company A, how do you know what company A is doing in every single nook and cranny of their business? At the end of the day, having run Group Health, it's impossible to know all the complex transactions a company does.

"You would have to have a staff of 500 people screening investments. We would like to have a staff of 500 people doing program work."
(Seattle Times, Jan.14, 2007)

Seriously? They want us to believe that it's just too much hard work to ferret out the bad actors and choose wiser investments? It's actually pretty easy to find an SRI advisor (I have one), and anyway, it's become commonly known that this type of investing is very profitable, indeed --especially when you consider that the SRI-screened companies don't face class-action suits (like oil companies do) which only drain $$$ from the companies' coffers.

This reminds me a lot of how boneheaded Bill's other behemoth (the mighty MS) behaved by flip-flopping on its support of state legislation protecting gays from discrimination 2 years ago. They were for it before they were against it. And now, well, they say they're for it again.

I would expect the Gates Foundation to change it's tune after all this bad publicity. In the meantime, the foundation is, literally, playing with the lives of children all across Africa. It represents the most cynical form of "cap and trade" health care I've ever witnessed.
Vaccinating children for malaria won't keep them safe from the toxic fumes produced by oil companies like BP (a major recipient of Gates Foundation investment).

They're not very good at the PR game, are they?

Posted by: shoephone | Jan 14, 2007 2:12:20 AM

Thanks Shoephone - their quotes are starting to offend me as well.

They already have a private investment firm they've hired to invest their money. If they direct that organization to invest the money responsibly instead of directing them to invest it for maximum return, I'm sure the folks at Cascadia would be willing to oblige.

And as you say there are firms that specialize in this and would be glad to help them.

Posted by: Jeff | Jan 14, 2007 9:07:57 AM

Today's NYT covers a recently published report on BP's egregious lack of worker safety.


After 15 died, and 170 were injured in a refinery explosion in Texas, it's been found that basic safety measures are not being practiced, eg. lab workers forced to work 24-hour shifts. It's probably more than coincidence that, because the accident occurred in Texas, James Baker was asked to chair the study, but the facts can hardly be disputed.

The Gates Foundation really needs some adults at the top of the food chain making responsible decisions. Investing in companies like BP raises serious questions about the safety of workers and residents living nearby BP operations, in the U.S. and around the world.

Posted by: shoephone | Jan 16, 2007 1:06:11 PM

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