The Baillie Gifford boycott does more harm than good

As readers and fans gather at Hay Festival this weekend to listen to writers including Paul Lynch, David Olusoga and Isabella Hammad, they will be in the midst of a maelstrom. Hay suspended its sponsorship from the asset manager Baillie Gifford after protests and the Edinburgh International Book Festival ended its partnership reluctantly on Thursday. 

Both festivals were targeted by activists because Baillie Gifford invests some client money in oil and gas companies, along with others they accuse of being linked with Israel’s war in Gaza. “If the art world continues to take this dirty money, we all become complicit,” declared the singer-songwriter Charlotte Church, who boycotted Hay along with the comedian Nish Kumar.

Baillie Gifford sounds like a shady outfit, if one takes at face value how it is portrayed by the pressure group Fossil Free Books. Only by making it divest or ceasing to accept its sponsorship would festivals it supports (along with the Baillie Gifford Prize for Non-Fiction) help to create “a literary industry free from fossil fuels, genocide and colonial violence”, the group claimed.

But let us read the fine print. Baillie Gifford is an asset manager that invests money from pension funds and others in 1,000 companies around the world. They include Google’s parent Alphabet, Amazon and Nvidia, the ones allegedly tied to Israel. Nvidia, for example, has been singled out because its artificial intelligence chips have military as well as civil applications.

Wait one minute. On that basis, I have links to “genocide and colonial violence” because I also invest in Alphabet, Amazon and Nvidia thanks to having savings in global index-tracking funds. Since they are among the world’s most valuable companies, so do many FT readers through pension schemes that delegate investment to asset managers such as Baillie Gifford.

Baillie Gifford specialises in investing in technology and growth companies. It has grown by taking big bets on transformative ventures, including those involved in the energy transition such as Tesla and Northvolt. As a result, it invests far less in fossil fuel-related companies than rivals: just 2 per cent of its £225bn assets under management, well below the 11 per cent sector average.

Such progress is not enough for activists, which raises the question of what sponsors they would deem acceptable. The energy sector is largely ruled out, as is pretty much any bank or financial institution. They do not appear to grasp that Norway’s Pension Fund Global, which they contrast approvingly with Baillie Gifford, is one of the world’s largest investors in the very same US technology companies.

Once you adopt a six-degrees-of-separation approach to divestment, it is hard to endorse anyone. Fossil Free Books welcomes public arts funding, but Arts Council England is largely financed by the UK government, which holds a golden share in BAE Systems, which is involved in producing the F-35 jet, as used by Israel’s air force. We can all conjure up tenuous connections.

Other arts institutions rely on sponsorships that would now be impossible for festivals to accept. The Tate has partnerships with Bank of America, BNP Paribas and BMW. Literary festivals are unusually vulnerable to authors being subjected to intense emotional pressure to withdraw abruptly from their programmes and blowing a hole in their ticket revenues.

It is strange for authors to boycott them because of one sponsor’s tangential link to Israel through Amazon, when the company is responsible for many print and ebook sales. To be consistent and to have skin in the game, shouldn’t they ask publishers to remove their titles from Amazon, and take a pay cut for the cause?

I put this question to Fossil Free Books, a mostly anonymous collective that communicates via Alphabet’s Gmail. The answer was no. “For us, this is a case of strategy, not of moral purity,” the writer Yara Rodrigues Fowler replied on its behalf. That is too slippery for my taste: it is clearly easier for protesters to demand that festivals lose money than to do so personally.

But the boycott’s biggest problem is not its shallow logic or its elements of hypocrisy: it is that the campaign causes harm in the guise of doing good. Baillie Gifford is not free to shed investments unless its clients instruct it, and another institution would buy them if it did. The chances of Israel being influenced by a UK literary boycott are remote.

The sponsorship that Church dismissed as “artwashing and greenwashing” has helped to support a fragile literary community, including free visits by school students to festivals. I do not imagine many companies will be eager to run a gauntlet of scornful and semi-informed authors to fill the gap. Corporate backing for literary events will decline further, while public funding is squeezed.

It is a cold world out there for many writers, so it is sad that they have been so easily manipulated by a group of activists into making it financially colder. Unless they are brave enough to resist this campaign of self-destruction, they can only blame themselves.

john.gapper@ft.com