In a ranking of climate villains in the fund management industry, Baillie Gifford would surely come a long way down most people’s list. The Edinburgh-based firm preaches long-termism and its specialism is backing technology companies, especially those with kit to accelerate the transition to cleaner energy and transport. It was early into Tesla on the thesis that polluting internal combustion engines are on the way out and Elon Musk had a winning electric design. Another high-profile bet was Northvolt, the Swedish pacesetter in batteries that is now the net zero envy of the rest of Europe.
Few portfolios in the mainstream asset management world are entirely free of fossil fuel assets but Baillie Gifford’s are definitely at the less oily end. As the firm has pointed out repeatedly in recent weeks, only 1% of the £225bn of the assets it manages is invested directly in fossil fuel companies, and the figure is still only 2% if one includes stocks such as supermarkets that sell petrol. That’s versus an industry average of 11%.
None of these details matter to a campaign group called Fossil Free Books. With the help of high-profile endorsements from the likes of the singer Charlotte Church and the comedian Nish Kumar, it has managed to bounce the organisers of the Hay festival and the Edinburgh international book festival into dropping Baillie Gifford as principal sponsor. For the activists, the fact that 1% to 2% adds up to the seemingly large number of £2.5bn-£5bn is all that matters – never mind that a single oil company, Shell, is worth almost £200bn, and never mind that Baillie Gifford is not free to divest because, as is normal, it manages to mandates set by its clients.
For good measure, the campaigners added that Baillie Gifford should divest from companies with “links” to “Israeli occupation, apartheid and genocide”. On its radar, though, are firms including Amazon, the semiconductor group Nvidia, and Meta, the owner of Facebook and Instagram, which are all among the world’s most widely held stocks as US tech is hard to escape in any diversified share portfolio, including (almost certainly) in the pension schemes of a large proportion of speakers and attendees at Hay and Edinburgh. Fossil Free Books, incidentally, has a “follow us on Instagram” invitation on its website even as it calls for divestment from the owner.
One can also wonder why a group of “workers in the literary industry” didn’t start by pitching their demands closer to home. Waterstones and the US book chain Barnes & Noble – two major employers of workers in the literary industry – are owned by New York-based hedge fund Elliott, whose commodities operation says it actively trades in “crude oil and oil products, natural gas” among other things. There hasn’t been a squeak from the campaigners on that front.
Such examples merely underscore how the financial world is a complicated place. Divestment can play a role in shifting societal norms, as Baillie Gifford acknowledges, but it is not guaranteed to make a difference. In the case of oil companies, the tactic looks particularly pointless currently as the firms are generating more cash than they can deploy in their operations, which is why share buy-backs are happening across the sector. It is possible that none of the major firms will need to raise capital from shareholders ever again. To the extent their boards care about who owns their shares, they would probably prefer investors who are less interested in energy transition.
Thankfully, somebody in the literary world can see what’s going on here. The environmental writer Mark Lynas, author of Our Final Warning: Six Degrees of Climate Emergency, wrote a sensible blog decrying the attacks on a “soft target” of Hay “in a campaign primarily relying on peer pressure and public moral intimidation, because the activists knew the festival management would have to give in”.
As he says, not a penny will end up being disinvested, nor will any emissions be reduced. “All that’s happened is that literary festivals now have huge holes in their budgets which will mean they have to raise ticket prices (excluding those on lower incomes) or maybe go out of business. Who would risk sponsoring now, given what has happened?”
Exactly right. The likely outcome from such extreme demands will be a decline in sponsorship for the arts. Yes, festivals should apply an ethical filter of some form, but an insistence on investment purity will only lead to a plunge in contributions. Boardrooms everywhere will now be assessing whether they should quietly not renew next year.
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The cause of climate activism will not be advanced when the demands are so absolute. Before the financing of arts festivals is completely wrecked, it would be useful if more authors dared to say so. Really, there isn’t a long queue of alternative liberal-minded sponsors out there.
