A pragmatist's view on the Baillie Gifford festival funding debacle: How it could have been a win-win.....

The situation with Fossil Free Books (FFB) and Baillie Gifford raises some nuanced and difficult issues. Many have been very well rehearsed over the past few days. This outcome seems, unfortunately to currently be one of ‘lose-lose’. Festivals have lost important funding and a decent fund manager has been tainted.

One the one hand this is a simple matter of moral principle and ethics – and you might expect Path Financial as deep green financial advisers to be on the side of the protestors. After all, they are absolutely correct this is a binary issue – either you can countenance ‘supping with the devil’ or you can’t. The choices seem to be: ‘Right or wrong?’, ‘Good or bad?’. Simple.?

Except it is not that simple.

Now as it happens, from the point of view of a green-investment expert, Baillie Gifford are generally one of the ‘good guys’. As they have documented very transparently, they have about a fifth of the exposure to fossil fuels as the average fund manager. Furthermore, they were pioneers in one of the most high-profile ‘positive impact’ funds which was a trailblazer in moving the green investment agenda forward. The Baillie Gifford Positive Change fund for example was a very early adopter of Tesla as an investment.

Not only did this make huge investment returns for investors in the fund, the type of support Baillie Gifford gave Tesla probably moved the tipping-point for EV adoption forward years, even arguably created it. Investments into funds such as this lead to financing of and development of some of the solutions the world needs. Impact?funds will invest into carbon capture technologies, renewable energy & energy storage. We hear that global electricity production is beyond?such?a tipping point whereby is on an inexorable and exponential path to being 100% renewable due to the sheer weight of money behind wind, solar and tidal. Without this investment then the status quo?persists and innovation does?not have the fuel of capital to help it develop.

And Baillie Gifford have actually suffered over the past couple of years as the cynical “performance tourists” of the investment world have abandoned ESG (Environmental, Social and Governance factors in investment) and have pivoted to re-investing in weapons and oil. These people are the true bastards. So before we vilify and shun Baillie Gifford we ought to look at where our own money is invested first.

Bailie Gifford as investors are somewhat representative of society and the consumer choices of that society. Consider if you will the consumer choices of Fossil Free Books supporters – if they were that purist they would presumably neither travel, eat meat nor use buildings made of concrete (to choose three options which are said to contribute the most to CO2 emissions). But of course, by-and-large I expect they do.

And as writers and creative artists they also recycle trees in order to make books from them (at very high energy input costs), as well as print them with ink derived from fossil fuels and then sell them via Amazon. Of course, it is simple and puerile to go down the “hypocrisy” argument – but it does serve to highlight the real-world dilemma that we all face. The moral high-ground of binary choices quickly melts down when we are faced with our day-to-day life choices.?

Many people will live exceptionally frugally with a very light touch in the planet, others will make adaptations to their lifestyle and yet others will consume like-there-is-no-tomorrow (in some unconscious attempt an ironic self-fulfilling prophecy).???

And it is the same with fund management.

But here is the point, and back to my overlooked practical option: Baillie Gifford are not some lone, demon bad-actor; the faceless manifestation of capitalism-red-in-tooth-and-claw who mendaciously exploit our planet. Far, far worse than Baillie Gifford are other fund managers who have 5x as much invested in fossil fuel. So if we really care about making the best moral and ethical choices – it’s not to kick out one of the good guys. We should start by examining our own consumer choices. And make sure it is the likes of Baillie Gifford who are managing our money. Or even better one of the even more ‘positive impact’ managers who are shunning fossil fuel and other bad-for-people-and-planet investments in favour of climate solutions. A good custodian will also use their stakeholding to pressure companies into making better choices.

It is estimated that up to 250,000 people attend the Wye Festival alone. If we assume that they have average pension and investment portfolios of ￡100,000 then that’s ￡25bn that can be utilised to change the face of capitalism. This is a significant amount of money. It has the potential to be highly influential.

To Fossil Free Books I would say, your influence has been profound. But how much more profound and meaningful could it be if you used your individual and collective influences to reach out to the wider public and explained the power of money to make the changes we actually want to see.? These investments after all should not only do good but perform better over the long term. My assertion is that this leads us to a world of win-win.