Pressure Mounts for Gates Foundation to Divest

Sometimes, the altruistic mission behind a foundation is contradicted by its investments.

The world’s largest foundations command immense financial resources. The Gates Foundation – funded by both the foundation’s name sake Bill Gates and Warren Buffett – holds a $42 billion endowment. The England-based Wellcome Trust possesses an endowment of over $27 billion.

The considerable resources behind these foundations are indispensable for world philanthropy. From promoting agricultural advancements in underdeveloped regions to combatting malaria, The Gates Foundation has taken a leading role in the fight for global health. The Gates Foundation’s funding for the World Health Organization (WHO) is so integral for the UN agency that it – somewhat controversially – affords the foundation the power to make certain programmatic decisions.

In order to keep endowments funded and foundation staff capable of bankrolling these important projects, foundations manage trusts that contain valuable investments. But what’s profitable doesn’t always correspond to what is most socially just.

The Gates Foundation, for example, possesses $1.4 billion in fossil fuel investments. While Gates is outspoken on climate change (you can read his passion and concern for global wellbeing with regard to the environment on his blog), this sizable investment appears to contribute to global health issues that The Gates Foundation spends money to mitigate. Spending resources on both sides of the equation, this complicated relationship between social justice work and financial investment appears self-defeating.

Many institutions have begun practicing divestment – cutting ties with the fossil fuel industry in recognition of the urgency of addressing climate change. An ongoing campaign is trying to convince The Gates Foundation – the largest charitable entity in the world – to do the same.

In an unprecedented step for a major news publication, The Guardian’s editorial board launched a campaign this year that looks to encourage the Bill and Melinda Gates Foundation and the Wellcome Trust (the two largest health charities in the world) to divest from dirty energy. Launched in conjunction with the environmentalist nonprofit group 350.org, the campaign has so far been unsuccessful. Bill Gates has rejected the campaigns premises in a series of interviews, including one with The Atlantic in which he declared that divestment is a “false solution.”

He remarked:

If you If you think divestment alone is a solution, I worry you’re taking whatever desire people have to solve this problem and kind of using up their idealism and energy on something that won’t emit less carbon – because only a few people in society are the owners of the equity of coal or oil companies  As long as there’s no carbon tax and that stuff is legal, everybody should be able to drive around.

By Gates’ own thinking, the world’s two largest emitters of greenhouse gases – the United States and China – have only until 2050 until they can no longer contribute anymore carbon to the atmosphere. In order to limit the adverse effects of climate change. Gates believes in a carbon tax designed to generate funding for a government-led research and development program for next-generation renewable energy technology. He has pledged $2 billion of his own funds to supplement the hypothetical program.

Other institutions, however, are heeding the call to align their investments with their philanthropic, pro-social missions. More than 400 organizations around the globe have divested over $2.6 trillion collectively. Including Stanford University and the Church of England, these institutions may not represent a lion’s share of the world’s wealth, but they have contributed to the larger conversation.

Perhaps once enough organizations with smaller endowments move away from these investments – and display the financial feasibility of doing so – larger institutions will follow. Corporate Knights, a Canadian research company, released a report arguing that the Gates Foundation would have $1.9 billion more to spend through its endowment annually if it fully divests from fossil fuels. The long-term costs of ignoring climate change are too great for nonprofits, social benefit corporations, and social impact investors to overlook the dangers of investing in dirty energy.

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