Last spring, the Maroon endorsed the creation of a Socially Responsible Investment Committee (SRIC). The proposed organization would have had the authority to examine the University’s investments, most of which are currently hidden from public scrutiny, and evaluate them based on a set of social and ethical standards established by committee members. The committee as it was proposed wouldn’t have had any power to actually change University investment policy; instead, it would only have written a yearly report to bring attention to the most ethically problematic businesses and organizations receiving University funds. Fortunately, the Maroon was not alone in supporting this moderate approach to a question that has historically divided students and administrators: Almost 80 percent of voters approved the creation of the committee in the Spring 2011 Student Government elections.
It is to the credit of President Robert Zimmer that he saw it fit to meet with the architects of the committee Wednesday. Usually, one would expect administrators to simply mention the Kalven Report and go on ignoring the mounting student concerns over how their University’s endowment is spent. Nevertheless, the final outcome has largely been the same. The original (quite moderate) committee proposal is basically dead, and some of its main supporters have moved on to compromise proposals, as the Maroon reported Tuesday (“New path sought for socially responsible investments”).
Unfortunately, these two proposed compromises are lacking in substance. As the Maroon put it, one of the proposals “recommends that the University send forms to its 200 investment managers asking them how they evaluate assets based on social, environmental, and governmental factors in addition to those of profitability.” Of course, it’s hard to see how an idea like this could do any harm; realistically, the likeliest outcome is that most who get the form will simply refuse to fill it out, while those who decide to answer its questions will simply say that the only criterion that matters when evaluating an asset is profitability. This proposal is so weak that administrators may actually agree with it, but that doesn’t mean it’s going to accomplish very much. It’s not a bad idea—the Maroon supports it over doing nothing at all, but it pales in comparison with previously discussed solutions.
The second proposal, at first glance, has more substance. It “would invest a small portion of the University’s endowment into a Community Development Financial Institution (CDFI), which would focus on traditionally underserved populations.” But this, too, won’t do very much. If this investment failed, it would undermine any efforts on behalf of SRIC and its supporters. Part of what made the original committee proposal so compelling was that its primary function was advisory: It would not, by itself, tell those who manage the University’s money what to invest in. A proposal like this goes against that principle and risks hurting the cause of socially responsible investment on campus. Again, this is not a bad idea, but it’s hard to see how it would help achieve SRIC’s original goals.
The future prospects for socially responsible investing on campus look quite bleak. Nevertheless, the Maroon encourages those who truly believe in SRIC’s goals not to settle for compromise solutions unlikely to accomplish very much. Nobody expected administrators to give in to student demands easily, but that doesn’t mean those demands should be forgotten. Regardless of the next step SRIC supporters take, one thing will always remain clear: Students have a right to know if the endowment to which they contribute every year is being used to fund the socially and ethically reprehensible.
The Editorial Board consists of the Editor-in-Chief, Viewpoints Editors, and an additional Editorial Board member. Colin Bradley recused himself from the writing of this article.
Hi everyone,
I was in the meeting on Wednesday and helped work on the proposals. First, I want to clarify a few things about each of them and then get into the meat of this editorials argument and invite everyone who is concerned or has more questions to reach out to me–especially because I’m not going to delve extensively into campaign strategies that address some of the more fundamental concerns of the editorial on a comment board, but would be more than happy to sit down with people who are interested in the issue/disappointed with what we’ve done to talk things out.
In terms of concerns raised about the first proposal, we were told by the Chief Investment Officer that, as the University is such a large institutional investor, if we request the managers to fill out a form, they will. Furthermore, this is relatively common practice. For example, the questions that we modeled the proposal after were from the New York City Employee Retirement System, who distributes these forms to their investment managers to monitor compliance with their investment standards. Finally, in terms of the usefulness of the information generated by the forms, sure, there is a chance that the investment firms we use don’t incorporate ESG metrics into their investment practices. But there is also a good chance that they do. Taking ESG into account is becoming more and more of a common practice in the investment field, especially after Bloomberg began releasing reliable data for the metrics. There is a chance that the University already does some of this or utilizes fund managers who offer this service. Either way, I think it’s useful knowledge.
In regards to the second proposal, I agree, it is something different than a SRIC. But I don’t think it has the potential to undermine our efforts. As a clarifying point, the proposal isn’t to invest money in a CDFI;instead, it would be to hold some of our money in one the same way we hold money in any other bank. And because the CDFI’s we suggested are FDIC insured, there is little risk in doing this. If the CDFI fails, we get our money back. (Yes, I know, up to $250,000. There is actually something called CDARS that is insured up to $50 million, which is always something to discuss).
Finally, I too wholeheartedly believe that as members of the University Community, students have the right to know if the endowment is being used to fund the socially and ethically reprehensible. If you think so as well, I encourage you to reach out to me and be part of this work, especially if you think that the campaign has strayed. (Or are a particularly concerned member of the Maroon Editorial Board).
Our efforts can only be as large as the manpower behind them, so the more we can do together the more we can do period. And in terms of gaining ground on SRI and the UofC, I definitely think that there’s things we can do.
And as a side note, I don’t engage in back-and-forth on comment boards, which I find generally unproductive. So if you have a clarifying question that I can answer here, ask away. Otherwise, contact me by email and I’d love to talk!
Sincerely,
Caitlin Kearney
cmkearney@uchicago.edu
the whole SRIC debate shows a fundamental lack of understanding in the way the university invests, and this editorial is more of the same. the u of c divvies up money amongst managers who then invest in large mutual fund-like entities that contain hundreds or more holdings of various sizes in different companies; most significantly, the holdings are constantly changing to reflect changes in the market. so it fundamentally doesn’t make any sense, currently, to demand that that the university not invest in company x or y, as there are so many thousands of continuously shifting small and large investments managed by many different fund managers with different investment policies. it is also next to impossible to take a snapshot of the companies in these massive investment portfolios.
but that doesn’t mean there’s not room for change or improvement. the letters asking fund managers about the responsibility of their respective investments is the first reasonable proposal i’ve heard, as the university could demand that their portfolios not contain certain kinds of companies, as or if relevant.
but it’s frankly ignorant for the student body, student government, or the maroon to continue demanding that students get to see a master list of investments to scrutinize, which first of all doesn’t exist due to the varied nature of the university’s investments, and which also can’t exist, because the nature of the market demands that investments not be static. the u of c invests in these kinds of funds because that is how large pots of money grow without being too risky, and it is in all of our best interest to have the endowment keep on rolling. certainly, no one wants to have it do so at the cost of funding corporate atrocities of whatever kind, but if there’s going to be a socially responsible investment committee, those discussing it need to be responsible with the facts of the university’s investment systems, what can be done within them, and what is just juvenile, misinformed nonsense.
This is the best editorial I’ve ever read from the Maroon editorial board! Right on – we should not kill the original proposal, which was entirely reasonable. Of the top 20 largest university endowments, only three others besides ourself have not implemented SRIC. Not only that, but our university endowment is the largest in the US not to be covered under a SRIC commitment. Isn’t that a clear political stance taken on by President Zimmer?
I was active in the Darfur divestment campaign and wanted to leave a few thoughts/words of encouragement.
1) The activists pushing for an SRIC are running an impressive campaign. Keep public opinion on your side, and publicly put the administration in moral indefensible positions. While they might appear indifferent, they do not like the uncomfortable spotlight.
2) Credit also goes to the editorial staff of the Maroon. It makes a difference to have the paper on your side. During the divestment campaign, I was literally compared to right wing racist Jean Marie LePen.
3) This is an issue generations of UofC students have advocated for. One of these days the wall will come tumbling down. Hopefully sooner rather than later.
Doesn’t a Committee depend on who is on the committee, what their backgrounds may be, how politicized they are or aren’t, and who they may be “for” or “against?” People on committees seen elsewhere (not U of C, of course)–or those who are more likely to fill out forms–are more likely people with more strongly-held viewpoints, whether right or wrong.