Gates Foundation Nixes SRI

The Bill and Melinda Gates Foundation says that its investment practices have little or no impact on social issues.

The principles of socially responsible investing (SRI) and shareholder activism don’t work for the Bill and Melinda Gates Foundation – the largest in the world – according to Patty Stonesifer, the foundation’s CEO.

Stonesifer put forth the position following publication of a two-part Los Angeles Times investigation, which claimed that hundreds of Gates Foundation investments – “totaling $8.7 billion, or 41 percent of its assets, not including U.S. and foreign government securities” – have been in companies that “contribute to the problems of health, housing and social welfare that the foundation tries to solve.”

Among examples cited by the Times: a polio and measles vaccination program in Nigeria, supported by the Gates Foundation, which takes place amidst pollution filled with “toxic byproducts” from nearby petroleum plants – owned by oil companies in which the Gates Foundation has invested $423 million. In the United States, the Times said, the Gates Foundation has invested heavily in finance companies with predatory lending practices and a healthcare company accused of medical lapses and fraud.

The Bill and Melinda Gates Foundation endowment reportedly totals $35 billion – not including a pledge by investor Warren Buffett to add about $31 billion in installments from his personal fortune. With still more contributions expected from Gates, “the total is higher than the gross domestic products of 70% of the world's nations,” the Times reported.

Following publication of the Times series, the Gates Foundation said on its website that it would review "our approach to investments” as well as “other strategies that can fulfill a social responsibility role, both in terms of their aspirations and in understanding the impact that they may have.”

But in a terse letter published a week after publication of the newspaper’s series, Patty Stonesifer, CEO of the Bill and Melinda Gates Foundation, wrote: “The stories you told of people who are suffering touched us all. But it is naive to suggest that an individual stockholder can stop that suffering. Changes in our investment practices would have little or no impact on these issues. While shareholder activism has worthwhile goals, we believe a much more direct way to help people is by making grants and working with other donors to improve health, reduce poverty and strengthen education.”

Stonesifer took exception to what she said were suggestions that the Gates Foundation had made “secret investments.” The foundation’s investments are available in public filings, she said, while the foundation’s investment policies are available on its website, gatesfoundation.org.

See related stories:

• “Dark cloud over good works of Gates Foundation”
• “Money clashes with mission”
• “A foundation states its case”