A Warm Welcome for Bill Gates

“In the history of successful social movements, there is always a flashpoint when the concerted strategy of a small group of people committed to a particular goal ignites a mass of people demanding change.” Bill Gates, The Economist

Bill Gates

Those readers who frequent the pages of The Economist will be familiar with the annual “year ahead” issue: a fat, wide-ranging, thoughtful and occasionally provocative issue dedicated to predictions for the coming year based on events of the recent past. Part of the pleasure I derive from this issue comes from the brief editorials penned by those who the editorial staff invite to opine. In this year’s issue, an article by guest author Bill Gates caught my eye. Why? Because I see it as the first public step by one of the world’s great business leaders to come out of the impact closet.

First, some context:

Some may remember the 2007 PR disaster that the Gates Foundation suffered. In short, an LA Times investigative journalist, impressed with the Foundation’s work to eradicate certain childhood diseases in the Niger River Delta, decided to spend some time in the area. You know, check out the scene in person. While there, he realized that much of the health crisis stemmed from oil companies – in particular, the Italian oil giant ENI – dumping toxic waste and spewing smoke from the refineries that loomed over the local communities. He put two and two together, quickly understanding that the Gates Foundation was effectively working to offset the environmental consequences of ENI’s actions by providing health care to the affected population. All good so far, right? Until he discovered that the single largest private owner of ENI shares was… wait for it… the Gates Foundation.

Bravo for life’s little ironies.

The resulting brouhaha was, in many ways, predictable. Apologies. Accusations. Retractions. Finger pointing. Huddled strategy sessions. Confusing messages. The net result? A very public, strongly-worded statement from Bill Gates Sr. to the effect that investing was investing, grant-making was grant-making, and never the twain shall meet. A disappointing outcome for those of us who saw in the event a remarkable opportunity for public discourse around shareholder responsibility, but perhaps an understandable one. Socially responsible investing was still very much a fringe activity, with little in the way of academic support, and even less institutional support from asset managers or wealth owners. So, after a few days of heated debate and a lingering sense of bewilderment, the subject slid from the front page.

And then, this:

“In the history of successful social movements, there is always a flashpoint when the concerted strategy of a small group of people committed to a particular goal ignites a mass of people demanding change.”

And this:

“Successful movements share certain key features: the remarkable leadership of a few visionary individuals and organizations; a moment that jars the consciousness of the masses; and political evolutions that create the environment where change seems possible. But perhaps the most important prerequisite for a mass movement is a record of progress that convinces the majority that change can happen if they commit themselves to achieving it.”

– Bill Gates, The Economist, November 20th, 2014

One would be forgiven for wishing that Mr. Gates had just come out and admitted that he is actually talking about impact investing, but we’ll give him a pass for now. It takes time to admit to one’s self that one’s perspective is evolving. I, for one, am happy to give him as much time as he needs. Why? Because I think – think – that he is on the cusp of his next great realization in terms of pursuing the Gates Foundation’s mission: that philanthropic capital is insufficient to the challenges ahead, and that the power of the capital markets must be harnessed to that end. And if I’m right, if the Gates Foundation is really contemplating, behind closed doors, the concept of aligning their invested capital with their mission… well, we are in for a helluva fun ride.

And for a bit of self-justifying proof, I offer this: Bill Gates has committed personal capital to an India-focused, seed-stage fund run by our good friends over at Unitus.

Welcome to Impact Investing, Bill. Glad you could join us.