Saturday, January 13, 2007

Kudos to Bill & Melinda Gates

"A man should never be ashamed to own that he has been in the
wrong, which is but saying that he is wiser today than he was
-- Alexander Pope  (1688-1744) English Poet
It is never too late to do the right thing.  plk
Gates Foundation May Shift Billions into Ethical Stocks after Attack on Investments
by Sarah Boseley
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Bill and Melinda Gates are to lead a wholesale review of their investments, which could lead to them shifting billions of dollars out of companies that are socially irresponsible or harm human health.

The announcement comes after a major investigation by the Los Angeles Times discovered that some of the billions spent by the Gates Foundation on improving health in the developing world came from its investments in companies that caused illness and disease through pollution and exploitation.

The foundation refused to comment in detail on the allegations but, in an interview yesterday with the Seattle Times, its chief operating officer, Cheryl Scott, said the foundation was rethinking its investment policy.

Because of the size of the foundation's investments - its endowment was $35bn (£18bn) at the end of 2005 before Warren Buffett said he would add some $31bn - any decision to invest more ethically would have a substantial impact and encourage other philanthropic foundations to look at their practices.

Ms Scott denied the move was a response to criticism, but admitted the foundation's current method of investment was "not 100% effective".  She said this year, for the first time, the foundation would conduct a systematic review of its investments, led by Bill and Melinda Gates, to find out if "there are cases simply where the situation is so egregious it will cause us not to invest".

They include BP, in which it had $295m of stock in 2005, and Royal Dutch Shell, in which it has a $35m stake. The two oil companies jointly own the Sapref refinery, outside Durban in South Africa, which is blamed for 24 significant spills, pipeline ruptures and explosions since 1998.  With the Mondi paper mill (owned by Anglo American, in which the foundation has a $39m investment), it is held responsible for significant air pollution by toxic fumes.

In the same area, the Los Angeles Times points out, the foundation is funding studies into a microbicide which could help protect women and their future children from HIV.  But the foundation invests in pharmaceutical companies which have lobbied hard to prevent affordable copies of their Aids drugs being manufactured by generics companies in India. One company, Abbott, makes a drug called Kaletra, which doctors say is essential for patients in Africa for whom basic drugs no longer work.

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Los Angeles Times: Dark cloud over good works of Gates Foundation
By Charles Piller, Edmund Sanders and Robyn Dixon, Times Staff Writers
January 7, 2007
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Ebocha, Nigeria --- Justice Eta, 14 months old, held out his tiny thumb.  An ink spot certified that he had been immunized against polio and measles, thanks to a vaccination drive supported by the Bill & Melinda Gates Foundation.  But polio is not the only threat Justice faces. Almost since birth, he has had respiratory trouble.

People blame fumes and soot spewing from flames that tower 300 feet into the air over a nearby oil plant. It is owned by the Italian petroleum giant Eni, whose investors include the Bill & Melinda Gates Foundation.

The makeshift clinic at a church where Justice Eta was vaccinated and the flares spewing over Ebocha represent a head-on conflict for the Gates Foundation. In a contradiction between its grants and its endowment holdings, a Times investigation has found, the foundation reaps vast financial gains every year from investments that contravene its good works.

In Ebocha, where Justice lives, Dr. Elekwachi Okey, a local physician, says hundreds of flares at oil plants in the Niger Delta have caused an epidemic of bronchitis in adults, and asthma and blurred vision in children.  No definitive studies have documented the health effects, but many of the 250 toxic chemicals in the fumes and soot have long been linked to respiratory disease and cancer.

The oil plants in the region surrounding Ebocha find it cheaper to burn nearly 1 billion cubic feet of gas each day and contribute to global warming than to sell it.  Under pressure from activists, however, Nigeria's high court set a deadline to end flaring by May 2007.   The gases would be injected back underground, or trucked and piped out for sale.   But authorities expect the flares to burn for years beyond the deadline.
The Gates Foundation has poured $218 million into polio and measles immunization and research worldwide, including in the Niger Delta. At the same time that the foundation is funding inoculations to protect health, The Times found, it has invested $423 million in Eni, Royal Dutch Shell, Exxon Mobil Corp., Chevron Corp. and Total of France — the companies responsible for most of the flares blanketing the delta with pollution, beyond anything permitted in the United States or Europe.
Like most philanthropies, the Gates Foundation gives away at least 5% of its worth every year, to avoid paying most taxes. In 2005, it granted nearly $1.4 billion. It awards grants mainly in support of global health initiatives, for efforts to improve public education in the United States, and for social welfare programs in the Pacific Northwest.

It invests the other 95% of its worth. This endowment is managed by Bill Gates Investments, which handles Gates' personal fortune. Monica Harrington, a senior policy officer at the foundation, said the investment managers had one goal: returns "that will allow for the continued funding of foundation programs and grant making." Bill and Melinda Gates require the managers to keep a highly diversified portfolio, but make no specific directives.

By comparing these investments with information from for-profit services that analyze corporate behavior for mutual funds, pension managers, government agencies and other foundations, The Times found that the Gates Foundation has holdings in many companies that have failed tests of social responsibility because of environmental lapses, employment discrimination, disregard for worker rights, or unethical practices.

One of these investment rating services, Calvert Group Ltd., for example, endorses 52 of the largest 100 U.S. companies based on market capitalization, but flags the other 48 for transgressions against social responsibility. Microsoft Corp., which Bill Gates leads as board chairman, is rated highly for its overall business practices, despite its history of antitrust problems.

In addition, The Times found the Gates Foundation endowment had major holdings in:

•  Companies ranked among the worst U.S. and Canadian polluters, including ConocoPhillips, Dow Chemical Co. and Tyco International Ltd.

•  Many of the world's other major polluters, including companies that own an oil refinery and one that owns a paper mill, which a study shows sicken children while the foundation tries to save their parents from AIDS.

•  Pharmaceutical companies that price drugs beyond the reach of AIDS patients the foundation is trying to treat.

Using the most recent data available, a Times tally showed that hundreds of Gates Foundation investments — totaling at least $8.7 billion, or 41% of its assets, not including U.S. and foreign government securities — have been in companies that countered the foundation's charitable goals or socially concerned philosophy.

This is "the dirty secret" of many large philanthropies, said Paul Hawken, an expert on socially beneficial investing who directs the Natural Capital Institute, an investment research group. "Foundations donate to groups trying to heal the future," Hawken said in an interview, "but with their investments, they steal from the future."

Summarized by Copernic Summarizer

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