Gates Foundation to review investments

The Bill & Melinda Gates Foundation is planning a systematic review of its investments to determine whether it should pull its money out of companies that are doing harm to society, Chief Operating Officer Cheryl Scott said Tuesday.

The foundation's current method of investing its assets is "not 100 percent effective," she said.

This year, for the first time, the foundation will do a methodical review to find out if "there are cases simply where the situation is so egregious it will cause us not to invest," Scott said.

The review will be led by the foundation's co-chairs, Microsoft co-founder Bill Gates and his wife, Melinda. Outside experts will be called in to advise on social-investing strategies, Scott said.

The move comes after stories by the Los Angeles Times, published Sunday and Monday in The Seattle Times, revealed instances in which the foundation had reaped big financial returns from investments in companies whose practices appeared to contravene the foundation's good works.

The stories cited the Gates Foundation investment in an Italian oil company that is blamed for causing serious pollution in Nigeria and the very health problems the foundation is trying to solve through grant programs.

In another example, the foundation invested in a mortgage company accused of predatory lending while at the same time providing more than $1 million in grants to a Seattle nonprofit that counsels victims of such lending practices.

Scott said the changes in the way the foundation's investments are handled were not in response to adverse publicity from the articles. "This has been an issue that has been top of line for a long time and will continue to be," she said.

The world's largest foundation had an endowment of about $32 billion at the end of August, and a pledge from investor Warren Buffett to donate about $31 billion more over time.

Many foundations are grappling with how to invest their assets responsibly.

In the L.A. Times story, critics said that if the Gates Foundation adopted a so-called mission-related investment policy, its huge size would influence other philanthropies to follow suit.

Until now, the Gates Foundation has invested to maintain a diverse portfolio and exercised its shareholder votes to encourage good corporate governance, Scott said.

Several years ago, the foundation decided not to invest in tobacco companies, but the route to other changes is not always so clear cut, she added.

"It's very, very complex," Scott said. "Let's say I don't invest in oil companies but I do go and buy gas with my car. Let's say I don't buy gas for my car, but I use rubber tires. Where do you draw the line?"

Kristi Heim: 206-464-2718 or