Tobacco Companies are not the Sole Incarnation of Evil

Posted on April 12, 2007. Filed under: Personal Blog |

The University of Toronto made headlines this week when it succumbed to student pressure and announced that it would no longer invest in Tobacco companies. Large charitable trusts, such as the Bill and Melinda Gates foundation, also have longstanding policies against investing in Tobacco companies. I think it’s time for such ethical investing to move beyond shunning tobacco companies.

Just one example to demonstrate the need: the Bill and Melinda Gates Foundation invests tens of billions of dollars.Bill and Melinda Gates Foundation logo Its institutional structure keeps its investments completely separate from its donations. Donations are assessed on the social good that they do. Investments are assessed solely on their ROI. Thus the Gates Foundation invests in problematic companies – problematic when assessed on grounds such as:

  • Environment: The foundation invests in companies ranked among the worst U.S. and Canadian polluters, including ConocoPhillips, Dow Chemical Co. and Tyco International Ltd.
  • Health: Investments in oil companies violating Nigerian laws by flaring gas — flares which contain toxic byproducts such as benzene, mercury and chromium which lower immunity and make children more susceptible to polio and measles — the very diseases that the Gates Foundation helps to inoculate against.
  • Social: An LA Times review of their investments found a disproportionate number in companies known for employment discrimination, disregard for worker rights, and/or unethical practices.

The Insider Movie PosterTheir asset managers have an explicit policy: they do not avoid investments in firms whose activities conflict with the foundation’s mission to do good. But wait! There’s an exception! Tobacco companies. Apparently all tobacco companies are so inherently vile that they are expressly forbidden from Bill and Melinda Gates Foundation investments.

Or not. The reason that the Gates Foundation refuses to invest in Tobacco companies is surely that they are PR pariahs. Government advertising, lawsuits, negative press, and compelling Hollywood fare like The Insider have cemented that reputation. Nobody wants to touch them – not even a charitable trust completely insulated from any market response.

And therein lies an opportunity. Ethical investing is essential to make the world a better place and investors manifestly respond to shifts in public sentiment and corporate perception. Change the way you and your friends think about companies and you’ll ultimately change the way you, your pension funds, and your governments invest. Start by shaming the Bill and Melinda Gates Foundation with a vote at dotherightthing.com

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