How Wellcome’s opaque fossil fuel investments harm its global health mission

Abstract

The Wellcome Trust’s commitment to tackle the health impacts of carbon emissions is threatened by its own lingering investments in the fossil fuel industry. So why does it continue to shun calls to divest while raising the status of climate change in its strategy? Tim Schwab reports

In recent years, the Wellcome Trust has pivoted in its role as a leading charitable funder of biomedical research to focus more on climate change, citing the far reaching health impacts related to carbon emissions: heat stroke, spikes in malaria infections, and respiratory problems linked to air pollution.

Wellcome’s website features an animated video describing its work on climate change and offering several solutions,¹ including, “We need to switch from fossil fuels to clean renewable energy.” That may not sound like a particularly bold proposal in this day and age, but it is for Wellcome, which has long faced criticism about its £28bn (€32.5bn; $39.6bn) endowment’s deep investments in fossil fuels. This includes a stake of more than £300m that the trust currently holds in BP and Shell.

But The BMJ has found that Wellcome’s financial stake in the continued use of fossil fuels extends well beyond its shareholder positions in oil and gas companies. In recent tax filings in the United States, Wellcome reported more than $130m (£92m; €107m) in deductible “qualified expenses” related to “intangible drilling” costs from 2014 to 2018.²

Intangible drilling costs usually describe the expenses involved in constructing new oil wells, while the related tax deductions function as government subsidies that prop up the fossil fuel industry³—and this can incentivise expanded oil and gas production.⁴

Wellcome has said that the deductions detailed in its tax forms relate to “a number of legacy private equity positions through funds and co-investments in energy related businesses,” but it would not provide The BMJ with details or agree to interviews. “We follow the US tax code in respect of our US investments and we pay tax at the level required of us,” a spokesperson said.

Fellow philanthropies and members of the medical community have expressed alarm at Wellcome, a non-profit charitable organisation, appearing to take advantage of fossil fuel subsidies.

“I don’t know how this works with Wellcome, but that is absolutely unbelievable,” says Ellen Dorsey, executive director of the Wallace Global Fund, a US based charity that chose to divest its endowment from oil, gas, and coal a decade ago.

“We receive charitable tax status to serve the public good, and our investments shouldn’t be undercutting the public good,” she says. “There isn’t a significant foundation that works on climate or health and doesn’t know that this debate is happening and that they should make the decision to divest.”

Robin Stott, an executive committee member of the UK Health Alliance on Climate Change, also expressed concern at news of Wellcome’s tax deductions. “It worries me that Wellcome may be engaging in this kind of rather covert or oblique way of supporting the fossil fuel industries,” he says, citing the “extraordinary perils we face from the ecological emergency in global warming.”

Resisting divestment

Revelations of Wellcome’s ongoing close ties to the fossil fuel industry come as many leading voices in medicine have moved to divest, such as the American Medical Association, the UK’s Royal College of General Practitioners, and the British Medical Association (which publishes The BMJ—which, in turn, has launched its own divestment campaign).⁵ Worldwide, more than 1300 large institutions, including 200 philanthropies, have announced their commitment to divest a total wealth of more than $14trn.⁶

This move to divest came to Wellcome’s doorstep as far back as 2015, when the Guardian newspaper announced a campaign targeting Wellcome and the Gates Foundation. Alan Rusbridger, former Guardian editor in chief, told The BMJ that the campaign was meant to highlight the contradictions between health focused charities and the fossil fuels that damage health. “If you want to take the moral view of it, you’re investing in stuff that will kill huge numbers of people,” he said.

A recent study published in Environmental Research, funded by the Wallace Global Fund, found that eight million people died in 2018 just from fossil fuel related air pollution.⁷

Both Gates and Wellcome pushed back on the Guardian’s short lived campaign, even as it garnered the support of nearly 1000 global health professionals (including The BMJ’s editor in chief, Fiona Godlee) and tens of thousands of other supporters.^{8 9}

At the time, Wellcome’s director, Jeremy Farrar, called divestment a “grand gesture,” arguing that the charity could be far more effective at fighting climate change by having a seat at the table and pressuring fossil fuel companies to change their business practices.¹⁰

Wellcome did not make Farrar available for interview by The BMJ, however, and refused to specify what the trust had achieved through his strategy. “We routinely have conversations with companies we are invested in about their approaches to sustainability,” said a Wellcome spokesperson. “Disclosing details of these conversations would compromise our ability to have influence in the future. We have previously exited positions when we were not confident that environmental responsibilities were being taken seriously.”

Divestment campaigners argue that such fuzzy statements show the limitations of shareholder activism. “Nothing has been achieved at the table through shareholder action . . . that meaningfully aligns with climate science,” says Brett Fleishman, head of global finance campaigns at the advocacy group 350.org. “It seems like a breach of fiduciary duty to not wake up and smell the atmosphere. We have nine years, which is an extremely short timeline when it comes to long term investing, to cut emissions in half, which will have a dramatic impact on the fossil fuel industry.”

Fleishman’s reference to “fiduciary duty” refers to the legal argument that non-profit organisations must align their endowment investments with their charitable missions. Divestment campaigners recently challenged Harvard University’s $42bn endowment on these grounds, filing a complaint with the Massachusetts attorney general that argued that the school’s fossil fuel investments were “damaging the world’s natural systems, disproportionately harming youth, poor people, and communities of color, and imperiling the university’s financial and physical condition.”^{11 12}

The complaint also describes fossil fuel investments as “excessively risky,” noting how poorly the sector has performed in recent years in the face of government regulations and public pressure. It’s a financial liability that Wellcome acknowledges, even as it maintains investments in fossil fuels.

“We believe that only companies with credible carbon transition plans will be good long term investments,” a spokesperson told The BMJ. “We have recently completed a detailed evaluation of our portfolio’s climate exposure . . . and we’ll be sharing plans for our next steps in the coming months.”

Wellcome’s investments profiled

Wellcome’s most recent annual report states that 4% of its public and private equity holdings are in “energy,” equal to around £1bn. The trust provided The BMJ with the current value of its holdings in BP and Shell—around £300m combined—but refused to disclose specific details of the rest of its energy portfolio.

In Wellcome’s most recent US tax filing, dated September 2019, the charity reported a number of “publicly traded partnerships” related to fossil fuels, including Mid-Con Energy, Cheniere Energy Partners, and Rhino Resource Partners.¹³ Another partner, Hi-Crush Partners, describes itself as a “a fully integrated provider of proppant and logistics services for hydraulic fracturing,” a controversial method of oil and gas extraction that has been banned in some jurisdictions.¹⁴

Similar controversy follows Wellcome’s reported partnership with Plains All American Pipeline, which is currently in the middle of a political furore in Memphis, Tennessee, over a proposed oil pipeline through the city. Members of the local city council, as well as political figures including the Nobel peace prize winner Al Gore, have publicly condemned the project as an example of environmental racism, noting that the pipeline would disproportionately affect the health of Black residents.

Sacoby Wilson, associate professor of applied environmental health at the University of Maryland, says that such impacts can be found throughout the life cycle of fossil fuels, from extraction to transportation to combustion to waste products.

He told The BMJ, “Through the whole continuum, folks of colour are disproportionately impacted at all stages, all phases. If you’re going to address climate change in this country, you’ve got to address racism in this country. I believe that if you are investing in fossil fuels, you are both perpetuating environmental racism and you are exacerbating environmental justice.”

This perspective seems to directly reflect a recent statement Wellcome issued on the #BlackLivesMatter movement, publicly acknowledging the trust’s own institutional problems with racism and pledging to reconsider the ways in which race intersects with its work.

“We need to reflect on racism as a central and defining part of our societies and our lives, and of the continual harm this causes to Black people,” said a Wellcome press release from June 2020.¹⁵

Our Planet, Our Health

As the Guardian’s divestment campaign picked up steam in 2015, Wellcome announced a £75m five year programme called Our Planet, Our Health, described as “a new initiative to investigate the connections between environment and health.”

The project’s broad focus on climate change included funding projects related to urbanisation, food systems, air pollution, and electric vehicles. At the same time, the trust’s £75m commitment represented a minuscule portion of the billions of pounds in charitable expenditures Wellcome had made over the previous five years. It also seems like a strikingly small sum, considering how prominently the charity promotes its work on climate change—highlighting this on its website’s landing page, on its social media profile, and in the media.

Saskia Heijnen, a former Wellcome staffer who helped get the Our Planet, Our Health programme off the ground, notes that while the trust has immense resources at its disposal to aggressively tackle health crises—which it has done in epidemics such as Ebola, Zika, and covid-19—it hasn’t put its full weight behind fighting climate change.

“If you’re communicating externally that there’s a climate crisis, then why are you not treating it like a crisis?” asks Heijnen, who now works at the Clean Air Fund. “Everything that Wellcome works on is going to be impacted by climate. Absolutely everything. Ultimately, it doesn’t matter if you have a new diabetes drug or not if you will not have access to water because there’s a drought, or food because the soil no longer has nutrients.

“And the changing climate will exacerbate many health conditions and inequities. If everything you are focusing on in terms of human health will be impacted, how can you not work on it with more urgency?”

The trust told The BMJ that it had made climate change one of the charity’s three main priority areas last October, which will lead to increased spending going forward. “Wellcome could not be clearer that addressing climate change and its impact on health is absolutely central to our mission,” a spokesperson said.

The Gates divestment

When the Guardian campaigned against the Gates Foundation’s fossil fuel investments in 2015 the organisation did not respond directly, but Bill Gates went on to condemn divestment in a variety of interviews, calling it a “false solution.”¹⁶

As recently as September 2019 Gates told the Financial Times, “Divestment, to date, probably has reduced about zero tonnes of emissions . . . I don’t know the mechanism of action where divestment [keeps] emissions [from] going up every year. I’m just too damn numeric.”¹⁷

But in a stunning reversal, by the end of the year the Gates Foundation had divested its $50bn endowment from fossil fuels, says Gates in his recent book, How to Avoid a Climate Disaster, published in February 2021.

Gates’s announcement could put new pressure on Wellcome to extricate its endowment from fossil fuels. But it also raises questions about what it means to divest. Tax records from 2019—the year Gates says that his charity divested—report the foundation having many investments in fossil fuels, including some of the world’s largest oil, gas, and coal companies such as Exxon, Chevron, and Glencore.¹⁸

This may reflect a limitation in the divestment movement: while large institutions seem guaranteed a public relations boost for announcing their plans to move away from fossil fuels, it’s not clear whether anyone is verifying that these institutions actually divest.

The environmental group 350.org, which maintains a database of hundreds of groups that have pledged to divest, told The BMJ that, even if it had the resources to verify these commitments, it would be impossible to do so because some institutions don’t make their full portfolios available for public scrutiny. Brett Fleishman explains, “It would be very weird for an institutional investor to announce divestment but fake it. We are happy to make the adjustment on our database if the Gates Foundation can’t meaningfully respond to requests for clarification.”

The Gates Foundation did not respond to multiple inquiries from The BMJ.