Threats of boycotts over Baillie Gifford’s sponsorship of the Edinburgh Book Festival are missing the point, says DAVID GAFFNEY
The best authors devote countless hours to conducting research on every aspect of their work. So I was surprised to hear that more than 50 writers and participants in this year’s Edinburgh International Book Festival had threatened to boycott the event in future unless Baillie Gifford is replaced as the main sponsor.
It strikes me that in lending their names to this ultimatum, some of the world’s foremost authors failed to carry out much, if any, research on the investment firm that is the target of their outrage.
Their beef is that Baillie Gifford has investments worth £5bn in companies linked to the fossil fuel industry. On the face of it, their action seems reasonable; a group of influential writers taking a leadership position on an issue of global significance, addressing the climate emergency by socking it to one of the corporate villains fuelling our flight to oblivion.
Narratives are rarely that simple, however, in real life or fiction. Five billion is a huge sum, but Baillie Gifford manages more than £223bn in total, so it represents just 2% of its clients’ money. Its peers in the fund management sector invest, on average, 11% of their total assets in companies linked to fossil fuel activities.
More than 5% of Baillie Gifford’s total investments, meanwhile, are in businesses whose sole purpose is to develop clean energy solutions. It was an early – and committed – backer of Tesla, Northvolt and other companies at the forefront of the transition to net zero. As a firm that seeks to achieve long-term growth for investors, going all-out for fossil fuels wouldn’t make much sense commercially, never mind reputationally.
The authors’ letter claims that “the only meaningful change is divestment.” But to whom would they have Baillie Gifford sell its shares? Less scrupulous investors will be happy to buy those shares, so what would that achieve? Baillie Gifford’s presence on the shareholder register is more likely to ensure executive teams and boards are held to account on their sustainability commitments.
It is possible to be both frustrated with the pace of the transition to net zero, and cognisant of the need for fossil fuels while we find and scale-up credible alternatives.
We live in an imperfect world, full of contradictions. Guarding against greenwashing is a legitimate pursuit, but there must be room for nuance and realism in the debate. Come to think of it, an actual debate would be good – you know, the kind of thing that typically happens at book festivals – and more illuminating than cancellations and performative walk-outs.
Alistair Moffat, director of the Borders Book Festival, said: “What these protesters are doing is imperilling the very existence of book festivals, and so imperilling the possibility of debate. There are strong arguments on both sides, but let’s have the arguments.”
Baillie Gifford has done more than most companies to foster forums for such debates through its patronage of the arts, including sponsoring a prominent prize for non-fiction, won two years ago by Patrick Radden Keefe, whose book Empire of Pain exposed the Sackler dynasty’s use of culture to whitewash its reputation, among other misdeeds.
We stand to learn so much from authors like Keefe, but like it or not their ability to tell us those stories is often dependent, at least in part, on the philanthropic endeavours of corporate sponsors. We should all take time to understand their motivations and their business models before we opine on their suitability for that role.
David Gaffney is a senior partner at Charlotte Street Partners. This column first appeared on the agency’s website
Preventing fossil fuel companies from raising capital to expand their operations is crucial to keeping the planet habitable. Scientists agree that if we burned only existing fossil fuel reserves, planetary temperatures would reach catastrophic levels. And yet, fossil fuel companies continue to raise money to expand well beyond current reserves, seeking funding right now to build new pipelines, oil wells, and coal plants.
When lots of people sell stocks in fossil fuels, that drives prices down, which diminishes the capitalization of the fossil fuel sector. The first large-scale empirical analysis of divestment in equity mutual funds shows that the stock prices of the carbon-intensive companies they have ejected from their portfolios fall, and those prices remain low over time. (https://www.sciencedirect.com/science/article/abs/pii/S0378426621003034?via%3Dihub)
Perhaps more importantly, the fossil fuel industry is not operating in an abstract world of supply and demand. Coal, oil, and gas companies are wielding substantial influence in the political arena to manipulate the economy. The US, for example, pays $646 billion in subsidies to the fossil fuel companies every year. (https://www.budget.senate.gov/chairman/newsroom/press/sen-whitehouse-on-fossil-fuel-subsidies-we-are-subsidizing-the-danger-#:~:text=You%20tally%20up%20the%20harms,%24646%20billion%20%E2%80%93%20every%20single%20year.)
When large investors have sunk our money into oil, coal, and gas, they *also* lobby politicians to protect fossil fuel profits. (https://www.levernews.com/blackrocks-stealth-anti-climate-agenda/)
When these major investors shift their money to renewable energy, they’ll almost certainly champion renewables and more responsible climate policies—and so shift the political environment against fossil fuels, with beneficial political and economic consequences for all of us.