Charitable trusts need to invest for income, not for a fashionable whim

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IoD director general Simon Walker talks about why charitable trusts need to invest for income, not for a fashionable whim

One of the most dangerous anti-business trends this year comes from the Guardian. ‘Keep it in the ground’ is the paper’s campaign to pressure two leading charities, the Wellcome Trust and the Bill and Melinda Gates Foundation, to sell off their holdings in coal, oil and gas companies.

It is starting to pay off: Prince Charles and the Sainsbury family trusts are ending fossil fuel investments. Now Oxford University has said it will reject investment in coal and tar sands.

I am not a climate-change denier. There is a real problem. Some communities are severely impacted by global warming and there is a serious risk to human survival. Governments are making genuine, if sometimes cack-handed, attempts to tackle it. Britain’s costliest EU regulations are all climate targets and cost consumers over £8bn a year.

If Prince Charles and the Sainsbury family wish to eschew investing in any area of business, that is their right. But the trustees of the Gates and Wellcome foundations are not there to impose personal preferences on the charities they administer. Their obligation is to their beneficiaries: victims of polio, Aids, malaria and tuberculosis.

Their job is simple: to maximise income on a sustainable basis. The analysis here is straightforward. Put aside a certain embattled supermarket chain and the best dividend payers in the FTSE are oil companies – Shell and BP. A little further down come BHP Billiton, Scottish and Southern Energy, Anglo American, Centrica and Petrofac.

If the trustees genuinely believe holding oil and energy shares poses a medium-term revenue risk, they should sell them. Evidently they don’t: the Gates Foundation has a stake in BP and ExxonMobil.

To sell up on the fashionable whim of the Guardianistas would be a wholesale dereliction of their duties. The victims would be those already suffering under the tragic burdens Wellcome and Gates have done so much to alleviate.

Deferent strokes

How very different even democratic countries are in their attitude to political leaders. In Washington last month, I watched bemused from a café window as the whole of Georgetown was blocked to traffic because Vice President Biden was meeting a Middle Eastern potentate at the Four Seasons Hotel.

One cannot imagine Knightsbridge being closed to allow the foreign secretary to attend a soirée at the Mandarin Oriental. Just hours earlier, I had been in a lunchtime audience that waited patiently for – and then cheered – President Obama, who arrived 90 minutes late for a speech. In Britain he would have been received with a slow handclap.

No competition

It seems an apt metaphor. The 10th-anniversary conference of ecoDa, the European Confederation of Directors Associations, on “European competitiveness” coincided with a Belgian general strike. Speakers, like me, duly arrived a day early and walked across Brussels, while others scrambled for any available private cars from the French and German borders because there were no trains. What else needs saying about European competitiveness?

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About author

Simon Walker

Simon Walker

Simon Walker served as director general of the IoD from September 2011 until January 2017, having enjoyed a career spanning business, politics and public service. From 2007 to 2011 he was chief executive of the BVCA, the organisation that represents British private equity and venture capital. Walker has previously held senior roles at 10 Downing Street, Buckingham Palace, British Airways and Reuters.

1 comment

  1. Robert 30 June, 2015 at 19:50 Reply

    This article is reckless and irresponsible. Charities have to think strategically, and invest ethically, otherwise they run the risk of alienating their supporters, getting caught in the crossfire of hostile media, and causing serious reputational damage.
    In any case, any charity that wants to help vulnerable people should commence with the dictum of Florence Nightingale: First rule of nuring: do no harm!

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