November 16, 2015; Seattle Times
The Seattle Times reported last week that the Gates Foundation “significantly” cut back its investments in some of the world’s largest oil, coal and gas companies, from $1.4 billion in 2013 to just around $475 million in 2014, according to tax documents released by the Foundation.
However, while the foundation’s overall holdings in fossil fuel companies decreased during those two years from 4.8 percent to 1.6 percent, there is speculation that the foundation may have made its decisions based on more practical reasons, including long-term profitability, rather than ethics. While dumping its ExxonMobil stock, for instance, the foundation purchased additional shares of BP and a Brazilian mining company, Vale.
The Gates Foundation has been under non-stop pressure from environmentalists for its refusal to join the more than 400 institutions and 2,000-plus individuals across 43 countries that have publicly divested from fossil fuel companies. The Guardian spearheaded a petition this year calling on both the Gates Foundation and the Wellcome Trust to commit to divesting from the top 200 fossil fuel companies within five years, an effort that has to date collected more than 235,000 signatures.
Former Seattle mayor and environmental activist Mike McGinn is a senior advisor to the campaign’s local partner, 350 Seattle, and his persistence on this issue, as Rick Cohen wrote here in September, has captured the attention of many in the divestment movement. Despite the foundation’s silence on the matter, McGinn attributes the recent actions on the part of the Gates Foundation to the divestment campaign. As he told the Seattle Times, “The [Foundation] has a history of responding to public pressure, while simultaneously not admitting they are responding to public pressure.”
For its part, the foundation has been steadfast in its refusal to join the movement. Bill Gates sat down recently for an interview with the Atlantic’s editor-in-chief, James Bennet, to talk about, among many things, the limits of the divestment campaign, reiterating his stance that divestment alone is not a solution, and that the answer will come with innovation.
“I want to tilt the odds in our favor by driving innovation at an unnaturally high pace, or more than its current business-as-usual course,” he said. “I see that as the only thing. I want to call up India someday and say, ‘Here’s a source of energy that is cheaper than your coal plants, and by the way, from a global-pollution and local-pollution point of view, it’s also better.’”
Arguments for and against divestment are many, and include sophisticated analyses of so-called stranded assets, the relative success of previous divestment movements (and whether those campaigns actually impacted market valuations or simply changed the narrative), and the need, as the clock ticks down on climate change, to balance investments in new technologies with sending an unambiguous signal to the extraction industries.
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Beginning November 30th, the much-heralded Paris climate conference will convene, and it is anticipated that the 190 participating countries will put forward a binding international agreement to keep global average temperature rise to no more than 2 degrees Celsius. As readers are well aware, over a twenty-three year trajectory there has been a dizzying array of international negotiations, treaties and agreements concerning climate change, beginning with the UN Framework Convention on Climate Change in Rio de Janeiro in 1992 and followed up with subsequent meetings in Kyoto, Bali and Copenhagen. All of these resulted in frameworks and next steps that have been stymied in various ways by national self-interest and bitter disputes between countries. In Copenhagen in 2009, consensus was finally reached on a scientific imperative for maintaining the 2 degrees Celsius limit (subject to review in 2015), but there was no binding treaty or agreement on how to accomplish this in practical terms.
As the Guardian’s Fiona Harvey explains, more than 150 countries have submitted plans to limit greenhouse gas emissions beyond 2020, the year in which current commitments made at the Copenhagen summit will expire:
These commitments cover about 90 percent of the global economy, and if followed through should lead to global warming of no more than 2.7C, according to analysis, which still falls short of the 2C limit that scientists say gives the world an even chance of avoiding catastrophic and irreversible warming.
Christiana Figueres is the executive secretary of the UN Framework Convention on Climate Change. Writing about the upcoming Paris summit, she says, “the political will to act on climate has arrived.” Remarking that international negotiations “don’t cause change, they mark it,” she points to a number of events that are bringing about change in the “real economy,” although several she cites, such as a purported decrease in demand and moral imperative to act, may be more in the category of wishful thinking. On the latter point, Pope Francis’s appeals notwithstanding, there is little to show that these are backed up with real on-the-ground deliverables.
As to what he sees as outcomes from the Paris talks, Gates had this to say:
It’s good to have people making commitments. It’s really good. But if you really look at those commitments—which are not binding, but even if you say they will all be achieved—they fall dramatically short of the reductions required to reduce CO2 emissions enough to prevent a scenario where global temperatures rise 2 degrees Celsius.
Characteristically, Gates is using his own resources, to the tune of $2 billion in fact, to invest in in renewable technologies initiatives. While a huge commitment, he sees the role of investors coming only after the government has played the lead role in stimulating ingenuity through funding of energy R&D. As he told Bennet, “I think dozens and dozens of approaches should be funded at the R&D level, and then people like myself, who can afford to take big risks with start-up companies, should—because of climate change—be willing to put some number of billions into the spin-offs that will come out of that government-funded activity.”
But with respect to divestment, is the Gates Foundation hopelessly behind the curve? According to Cohen, not really. While more than a hundred foundations have divested, along with hundreds of other pension funds, NGOs, universities, and faith-based groups, the largest foundations have yet to publicly come forward (and in the university space, schools like Harvard and MIT have yet to divest). But the heat is on the Gates Foundation, of course, because it is the world’s largest charitable foundation, and its participation would be hugely significant. That’s important, and there’s little to indicate that it will be let off the hook anytime soon.—Patricia Schaefer