Bill Gates, the world's richest man, on Friday delivered a snub to the ethical investment movement by saying his foundation should concentrate on grant giving, rather than judging the social impact of businesses in which it invests.

In a statement on its website, the Bill & Melinda Gates Foundation, the world's largest philanthropic body with $35bn in assets, ruled out screening companies in which it invested based on factors such as their environmental record or lending policies.

The comments followed a series of articles in the Los Angeles Times highlighting potential contradictions between the Foundation's philanthropic giving and the practices of some of the companies in which it invests, including environmental pollution, usurious lending and the sale of medicines at high prices.

The statement said that Bill Gates and his wife, Melinda, who oversee the foundation's investments, would still review policies, but "we do not anticipate any change in our approach".

It said the endowment – which finances grants totalling more than $1.5bn a year – would reject only investments that represented a conflict of interest for the couple and those where companies were involved in "activity we find egregious".

This has so far prevented the Foundation investing only in tobacco companies.

It has also used its shares to push for "good management and good governance", including opposing a shareholder proposal at one company in which it invested on AIDS that ran counter to its grant-making approach.

However, it argued that the issues of social responsibility were too complex to be integrated into its investment approach, and one Foundation official said it did not want to be distracted by devoting time to the issues.

The official said: "We focus our energies on the investments we can make through our programmatic work, because that is how we can have a direct and dramatic impact that will improve people's lives."

Penny Shepherd, chief executive of the UK Social Investment Forum, said: "This is a rather out-dated perspective. The evidence is that you can invest responsibly without damaging your financial returns."

However, Danny Truell, chief investment officer at the Wellcome Trust, the UK's largest medical charity with a £14bn endowment, endorsed the Gates' approach, arguing that focusing on ethical investment would sharply limit returns.

The Gates Foundation said its endowment generated average returns of 8.5 per cent a year since its creation in 1999. Its most recent report for 2005 showed $9.5bn of its $29.5bn in investments was in equities, with total net income of $1.4bn.