From the protests in 1968 to the Minutemen and Ahmadinejad controversies of recent years, Columbia has found itself in the news because of student protest. At many colleges and universities, the ideas of political and social progress evoke images of activist students and professors. University administrators often represent the converse: staid and out of touch bureaucrats interested only in profit. But in recent years, universities themselves have begun to use their endowments, traditionally sources of financial growth, as tools of social change. Institutions are now reexamining their role in public life by engaging in socially responsible investing (SRI), or the use of investments for the promotion of social good.
Socially responsible investing dates back to the eighteenth century, when religious organizations such as the Quakers prohibited their adherents from investing in “sinful” industries such as alcohol, tobacco, firearms, and the slave trade. Many other actors began adopting it as a strategy during the 1970s and ‘80s, when protestors seeking to undermine Apartheid South Africa agitated for divestment, or the strategic selling of shares, as economic leverage which might induce progressive political change. Whereas SRI had previously consisted of screening out industries with negative social costs, the new divestment strategies targeted corporations in a wide variety of fields whose business helped buttress the Apartheid regime.
At the time, Columbia University had a number of investments in corporations active in South Africa, such as General Motors, IBM, Colgate, and American Express. In 1985, a group of students called the Coalition for a Free South Africa, who had unsuccessfully campaigned for divestment for several years, launched a two–week fast that culminated in the barricading of Hamilton Hall and a protest of nearly 3,000 people. Under mounting pressure and perhaps haunted by the specter of 1968, Columbia acquiesced to the protestors’ demands, becoming the first Ivy League school to divest from corporations active in South Africa (although full divestiture did not occur until 1991).
In 2000, fifteen years after the strike, Columbia established the Advisory Committee on Socially Responsible Investing (ACSRI) based on a proposal submitted by the group Columbia Students for Socially Responsible Investment. Composed of four students, four faculty, four alumni, and two non–voting members (the University’s executive vice president of finance and an SRI manager), the ACSRI functions in an advisory capacity for the University Trustees, the individuals responsible for making decisions on Columbia’s investments. According to its mission statement, the Committee must issue an annual report and agenda each year. This must include “recommendations to the University Trustees on issues related to investments in the University’s endowment, including but not limited to the exercise of the University’s proxy–voting rights, shareholder initiatives, and portfolio screening.”
It is tempting to view the creation of the ACSRI as a political play, especially when considering its opposition to South African divestiture in 1985. The Committee helps stave off community discontent by creating a forum for students, professors, and administrators to review the university’s investments. Additionally, it earns Columbia positive press by demonstrating a commitment to social justice.
Yet there are reasons to believe that Columbia founded the Committee with earnest intentions. During the 1990s, SRI moved into the mainstream of investor practices, making it feasible for institutional shareholders to invest their money in a both ethical and financiallysound manner. Additionally, the decision to found the ACSRI received support from thenpresident of Columbia, George Rupp. Whereas Michael Sovern, Columbia’s president in 1985, was known for his distance from undergraduate student life and his deep concern for the University’s financial standing, Rupp presented himself as focused on undergraduates and dedicated to social good (he was himself arrested for civil disobedience in the 1960s). With the memories of 1985 rapidly fading, Rupp found himself positioned to institutionalize what had once been cause for radical protest. Students who might have previously stood against the University now have the opportunity to work within the system to effect change. And institutionalized protest does not end with SRI. President Bollinger personally welcomed student leaders from the 1968 protests back to Columbia this past spring for 40th anniversary commemorative events. And the previous fall, Bollinger delivered an excoriating, if controversial, introduction for Iranian President Mahmoud Ahmadinejad, in which he detailed a litany of human rights abuses perpetrated in Iran.
Yet despite the apparent union of the activist spirit with university administration, student activism is far from dead at Columbia. In November of 2007, the school witnessed one of the more memorable events in its rich activist history, as undergraduates launched a hunger strike with demands relating to the ethnic studies program, the Office of Multicultural Affairs, Core Curriculum reform, and Columbia’s expansion plans for Manhattanville. Bollinger and the other deans’ handled the strikers and their supporters in gentler fashion than Sovern, who in 1985 refused to meet with the fasters until fifteen days after their strike began and threatened to bring the NYPD to eject the students blockading Hamilton. But the complaints of administrative unresponsiveness in 2007 evoked the similar frustrations felt by activists twenty–two years earlier.
In such a context, one might question the intentions of a university–sanctioned institution designed to promote social justice. Could students and faculty trust the University to sincerely undertake socially responsible investing? Indeed, an examination of the Committee’s first eight years reveals that it has done much to earn such trust, but its record is imperfect, and its potential remains unfulfilled.
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From 2000 through 2005, the ACSRI focused almost entirely on making recommendations to the Trustees regarding shareholder resolutions voted on in proxy ballots. These nonbinding resolutions, previously used by shareholders to influence management decisions related to profitability, have been employed in recent years by a number of nongovernmental organizations (NGOs) seeking to pressure corporations to improve their social performance. These NGOs purchase the minimum number of shares necessary to file and vote on such stockowner resolutions.
The ACSRI and Trustees look at a number of these resolutions each year to determine if they deserve Columbia’s support. The Committee often decides which ballots to recommend based on suggestions from the Interfaith Council on Corporate Responsibility (ICCR), an organization that has been an advocate for corporate social responsibility for decades. As it has streamlined its operations, the ACSRI has made voting recommendations on an increasing number of resolutions; in 2000, it submitted recommendations on only 19 resolutions, while last spring it advised the Trustees on 74 different initiatives.
The Committee’s track record on proxy review is generally positive. Its annual reports outline its decision–making process, revealing that when initiatives are not supported, the Committee has a nuanced reason for rejection that extends beyond profit concerns. Geoffrey Heal, former chair of the ACSRI, explained that while in some instances the Committee agreed with the principles behind an initiative, it declined to sign on because of contentious rhetoric. For example, certain animal rights resolutions, rather than simply stating their case, describe the corporation as having “blood on its hands,” a problematic statement for Columbia to endorse. Heal has taken the extra step of encouraging such groups to reconsider the wording of their presentations.
Additionally, accord between ACSRI and Trustee decisions is on the rise. Although the final report for the 2007–2008 fiscal year has not yet been released, it is expected that the Trustees will adopt every ACSRI recommendation regarding proxy resolutions. Heal believes that this increase in agreement indicates an ethical alignment between the Committee and the Trustees: “The Trustees are on the same page as Committee members ethically and emotionally—they are scandalized by the same things that scandalize us.”
Yet while shareholder resolutions can be an effective tool in pressuring corporations to change policy, they usually require widespread investor support. A simple vote from an institutional investor like Columbia is a relatively weak signal. Although the University endowment is now over $7 billion, this money is spread over physical assets, private equities, hedge funds, and corporations, so that no single corporate investment amounts to more than a few million dollars. Columbia’s voting power is therefore small compared with the overall shareholder vote and is mostly symbolic.
It is thus somewhat surprising that the ACSRI did little besides advising on resolutions during its first five years of existence. In 2005, members of the Sudan Divestment Taskforce at Columbia approached the ACSRI, asking it to do more than make voting recommendations. They presented the case for targeted Sudanese divestiture at a town hall held by the ACSRI in November 2005, arguing that should the University wish to help bring about the end of the ongoing humanitarian crisis in Darfur, divestment was its best option.
The Committee had already encountered one request for divestment. A group of Barnard and Columbia faculty submitted a letter and petition to the ACSRI in 2002 asking that the University divest from all corporations who manufactured or sold military equipment to Israel. The Committee determined two criteria by which to determine divestment requests. First, could Columbia, an ethnically and ideologically diverse community, agree that the merits of the situation lay disproportionately on one side? Second, would divestment be more effective than shareholder engagement? Given the complexities of and fierce disagreements over the Israeli–Palestinian conflict, the Committee unanimously rejected the call for Israeli arms divestment.
In their first meeting after the town hall in 2005, the ACSRI set to work to determine if the Divestment Taskforce request met these two criteria and quickly answered in the affirmative. The Committee unanimously approved a list of companies marked for divestment in the spring of 2006, and Columbia took the rare step of issuing an official press release, including a supportive statement from President Bollinger. Yet Columbia had no investments in any of the corporations listed (or companies subsequently added to the list during the Committee’s now annual review of this list). The action served more as a means of preventing future investment than actually selling shares. Emily Gayong–Setton, CC ‘08, who worked on the campaign, says she “felt it was preventive divestment, which isn’t really divestment,” and called the coincidence suspicious.
Many Columbia students shared Setton’s skepticism, contending that Columbia conveniently avoided withdrawing its holdings from companies not included in the list. After review, Arielle Schwartz, CC ’08 and member of the Task Force, acknowledged that there was no post–hoc effort to keep current investments safe, and that the Committee “came up with a series of criteria for companies that would warrant divestment, and then looked at Columbia’s holdings.” Yet for a Columbia activist with a sense of history, her inclination to distrust the University does not seem unwarranted. In the weeks before the fast of 1985, the Trustees agreed to a “freeze” on South African investments, while continuing to buy stocks in companies like IBM. Schwartz claims that her first meeting with the Committee was “a little bit tense,” and that she “never felt that they [the ACSRI] would be our allies.”
After its slow start, the Committee continued to widen the scope of its shareholder advocacy. At a November 2006 town hall meeting, students representing Columbia’s chapter of Amnesty International brought up issues surrounding Chevron’s legacy operations in Ecuador.i For decades, Texaco, a recent Chevron acquisition, had owned joint operations with Ecuador’s state oil company in the country’s eastern Amazonian region. When the operations ceased, Texaco left behind large waste pits and oil spills. Advocates claimed that the mess contaminated groundwater and topsoil, leading to serious health concerns for the local indigenous population, including increased incidence of rare types of cancer and high rates of birth defects. Chevron argued that these health issues stemmed from the inhabitants’ poor sanitary practices. The students asked that the ACSRI vote yes on a shareholder resolution condemning Chevron’s actions in Ecuador, send a letter to the management of Chevron expressing their displeasure, and make a public statement regarding their decision in which they would encourage their peer institutions to follow suit.
In addition, this publication, The Current, joined Amnesty International’s efforts by publishing an editorial in Winter 2006 advocating that Columbia divest from Chevron. The editorial was submitted to ACSRI to bolster Amnesty’s initial case.ii In early 2007, the Committee listened to a series of presentations on Chevron’s responsibility in Ecuador. A representative from Amnesty International USA’s Business and Human Rights division, professors from Columbia’s School of International and Public Affairs (SIPA) and Law School, and three representatives from Chevron all made their case before the ACSRI. In May, the Committee, apparently unimpressed by the Chevron team, sent a Trustee–authorized letter to Chevron CEO David O’Reilly which encouraged Chevron to
 The first day of the 1985 blockade of Hamilton Hall by pro-divestment activists. |
The ACSRI drafted similar letters this past spring, after hearing more student presentations at the annual town hall in the fall of 2007. One letter was sent to Chevron, concerning their operations in Burma, and another to Dow Chemical, regarding the legacy of the 1984 chemical disaster in Bhopal, India, which lead to the immediate death of over 5,000 Bhopalis and ongoing health problems for many thousands more. These letters are an encouraging sign that the Trustees and the ACSRI are willing to engage companies which have not met standards befitting multinational corporations with a professed commitment to social responsibility.iii
In addition to letter writing and reviewing shareholder initiatives, the Committee hosted a conference this spring on responsible endowment investing. Sponsored by Columbia Law School’s Human Rights Clinic and the Responsible Endowments Coalition, the conference brought together 60 individuals from 17 universities and colleges across the country to discuss their successes, frustrations, and ways in which they can encourage future cooperation. Heal says that the conference was “the first of its kind,” and that in some regards, Columbia stood out among its peers regarding SRI: “We have thought about these issues as much as anyone else has, and perhaps more than some have...We’re the only university that has written letters to corporations, and I think we’ll see other universities doing it more as a result of the conference.” Those involved say the conference successfully garnered a cooperative spirit among the institutions, but unfortunately, the ACSRI did not open it to the larger Columbia community.
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While the ACSRI has achieved many successes in its first eight years, activists note that much work remains. Lisa Sachs, a 2008 Law School and SIPA graduate who co–authored an SRI handbook for colleges and universities, sees a number of areas in which the Committee could improve: “While the ACSRI might be ahead of peer committees, they’re behind where they could be—they’re unaware of their own potential.”
Sachs, a strong advocate for and principal organizer of the ACSRI’s conference, thinks that such cooperation must be a doorway to greater collaboration, like sharing research on various SRI topics and coordinating shareholder activist efforts. While a letter written to the CEO of Chevron might be a good step, “a letter signed by the top 20 universities in the country would be far more powerful.” It might take time to establish a network to enable such constant cooperation, but the combined efforts of institutional investors would ring far louder than the voices of uncoordinated universities. Columbia University, already positioned as a leader after hosting the conference, could also lead the efforts to create an inter–university organization.
Sachs has also pushed the Committee to consider positive investment strategies which would promote social responsibility. Last fall she asked the ACSRI to consider setting aside a small percentage of the endowment for investment in community banks which provide low–interest loans to households and small businesses. Heal says that such a fund already exists but is not part of the main Columbia endowment, since the returns from community investments are often not as high as those in larger corporations.
However, the ACSRI has not fully considered other positive investment strategies. Even Heal admits that as of now, “the ACSRI is investing in old–style screening mode...There are an increasing number of funds on the market which are investing—not screening—investing in sustainable companies.” He thinks that the ACSRI should consider such SRI funds in the coming years, but strangely argues that such issues are “not within the Committee’s remit.” This seems to be an unnecessarily conservative interpretation of the ACSRI’s mandate, which permits the creation of its own agenda. A number of schools have already started such funds. Tufts, for example, has created its own special fund which provides capital for microfinance firms.
Along with other students, I have personally asked the Committee to work on another initiative: the creation of proxy voting guidelines. For years, the ACSRI has discussed creating such guidelines to streamline the arduous proxy review process, provide continuity for a committee with short member term limits, and allow time for the ACSRI to consider other matters during the busy spring proxy season. The creation of guidelines would also show Columbia that the ACSRI does not make important decisions on an ad hoc basis, but rather follows certain principles regarding endowment investment.
Some committee members have expressed concern that guidelines would eliminate discussion and nuanced decision–making. Sachs suggests, however, that “guidelines wouldn’t force them to vote differently than they normally vote—it would streamline their process, but still allow for some case–by–case examination.” Brown University, for example, uses a list of guidelines while still leaving open the opportunity for individual examination.iv Heal says that the ACSRI has begun to collect information on its voting patterns, but if and when it does make guidelines, “it will be the decision of the committee whether or not these guidelines are public.”
Greater collaboration, positive investment, and the creation of guidelines are all steps which could improve the scope of the Committee’s work, but certain problems deserve more immediate attention. For example, the Trustees lack a clear policy for handling conflicts of interest. In 2001, the ACSRI voted in favor of a resolution which recommended that Citigroup link executive pay to social criteria; the Trustees abstained on the vote. Such a difference of opinion might seem unremarkable, since the Committee and the Trustees have differed in opinion in other cases. But that same year, the Trustees voted in favor of similar resolutions at two other corporations, in line with ACSRI recommendations. Several Trustees Emeriti have ties with Citigroup, and Vikram Pandit, selected as CEO of Citigroup in 2007, joined the Board of Trustees in 2003. Such incidences of personal conflict are quite rare, but they raise the question of whether and how the Trustees recuse themselves from SRI deliberations when serious conflicts of interest arise.
Another concern is the disconnect between the Committee and the larger community. The ACSRI holds only one community hearing each November, where students, faculty, and alumni can make suggestions and propose items for it to add to its agenda. Heal says that the town hall three years ago brought 50 to 100 community members out, while he found the turnout at last November’s gathering disappointing. “We’ve taken every possible measure to advertise—emails to student groups, an ad in the Columbia Spectator,” Heal states. He further adds that community members can learn about the committee from their website, www.finance.columbia.edu/sri, where they can email suggestions. Yet, inexplicably, no Columbia web page clearly links to the site—the activist groups section of the student website mentions the ACSRI, but the link is broken.
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SRI activists all claim that the ACSRI has failed at outreach. Sachs says that “while the Committee is ostensibly representative, it has done a poor job of opening up the ACSRI to the school.” “The dynamics between students and the Committee are hard to figure out, as if it hasn’t figure out what to do with students,” says Gayong–Setton. Schwartz echoes the concern; she wonders if the Committee exists to represents students and faculty, or the Trustees, or both (and if it is even possible to represent both simultaneously). Anna Couturier, an undergraduate member of the ACSRI, worries that the Committee will be “cast like the Wizard of Oz behind the curtain,” and that a lack of transparency might signal intentions less admirable than those they actually have.
The ACSRI could address these concerns in a number of ways. By clarifying or perhaps improving the process by which one becomes a member of the Committee, they would assuage activists who think the SRI process lacks transparency. Couturier joined after she stumbled upon the Committee’s website, sent in a letter of interest, and received an application, which was reviewed and approved by the ACSRI, University Senate, and President Bollinger. For a position of such importance, a more formal process of advertising the position, or even making student positions elected, should be considered. The Committee should also take steps to educate the community about the complicated mechanisms used by shareholder activists. Better informed students could make their proposals both more reasonable and far–reaching.
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One clear message has emerged from the first eight years of the ACSRI: the work of non– institutional activists has not ended. Beyond proxy review, every important action taken by the Committee, from divestment to letter writing to holding a groundbreaking conference, has come from concerned students, not from within the Committee itself. If the past is any indication of the future, students must continue to push the ACSRI to live up to its name, to embrace reforms, and take further steps to improve its performance.
Students, for their part, should work harder to engage the Committee. Just as Schwartz never expected the Committee to be an ally, many still find it odd that Columbia could possibly want to work with them in advancing shared goals. Members of the Columbia Coalition Against the War, who introduced a proposal for divestment from arms manufacturers at the town hall last fall, brought posters with anti–war messages to hold during their presentation. They seemed unaware that they might be alienating one of their few institutional allies within Columbia.
Couturier describes the Committee as an institution with good intentions and limited resources, forced to navigate “hot issues that divide the student and administrative body,” and deal with the Trustees who “constantly keep our aims in check.” So long as resources remain limited, issues remain contended, and the Trustees remain shrouded in secrecy regarding their intentions, student activism will remain vital. Institutions like the ACSRI are important, but they should not be entrusted with Columbia’s ethical soul. Students must push the system to do better. But just as importantly, they must know how to work outside the system when it fails.
i Full Disclosure: I was one of the students involved in the campaign.
ii http://www.columbia.edu/cu/current/articles/winter2006/from–the–editors.html
iii See http://chevron.com/about/chevronway/ and http://www.dow.com/commitments/index.htm for more on Chevron and Dow’s social responsibility policies, respectively.
iv The Brown committee’s voting guidelines can be found here: http://www.brown.edu/Administration/Finance_and_Admin/ACCRIP/guidelines.html
Above: An editorial cartoon in the Columbia Spectator shows a villainous university trying to stop student efforts in favor of South African divestment.
NICK SERPE is a Columbia College Junior majoring in Philosophy and Political Science. He can be reached at nick.serpe@gmail.com..