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Baillie Gifford fund being held to an impossible standard on Israel and oil

The active fund giant has only 2% per cent of client money invested in companies with business related to fossil fuels, well below market average

Sally Rooney was one of hundreds of signatories to a letter criticising Baillie Gifford. Photograph: Nick Bradshaw
Sally Rooney was one of hundreds of signatories to a letter criticising Baillie Gifford. Photograph: Nick Bradshaw
Proinsias O'Mahony's picture
Proinsias O'Mahony
Sun Jun 16 2024 - 06:15

The recent agonising about the moral credentials of UK active fund giant Baillie Gifford has been a sight to behold.

A quick recap: the Edinburgh International Book Festival and the Hay Festival recently dropped Baillie Gifford as their main sponsor, following a campaign by an organisation called Fossil Free Books.

In a letter signed by hundreds of writers, including Sally Rooney and Naomi Klein, it called on Baillie Gifford to “divest from the fossil fuel industry and all companies involved in Israeli occupation, apartheid and genocide”.

Much research suggests divestment may be an ineffective strategy, but let’s leave that aside.

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Far from being a laggard on climate change, Baillie Gifford notes only 2 per cent of client money is invested in companies with business related to fossil fuels, compared with the market average of 11 per cent.

It takes a long-termist approach, and has made big investments in clean energy companies like Tesla and Swedish battery developer Northvolt.

Fossil Free Books complains Baillie Gifford invests in companies with “direct or indirect links to Israel’s defence, tech and cybersecurity industries, including Nvidia, Amazon and Alphabet”.

However, these are three of the biggest companies on the planet, and any commercial dealings with Israel are tiny relative to their overall business. Anyone who invests in global index funds is exposed to these companies, as is pretty much anyone with a pension fund.

Additionally, most people use Google and Amazon products. Are we all turning a blind eye to “genocide and colonial violence”? Baillie Gifford is being asked to live up to impossibly pure standards. The criticism is absurd.

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