November 18, 2011

Investing ourselves

The new, more complex proposals of SRIC leaders will succeed with student support and input.

Some of you may know me, but most of you probably recognize me from around campus. I may have asked you to sign a petition, reminded you to vote in the spring SG elections, or asked you to take part in a delegation to President Zimmer’s office—efforts all geared toward the creation of a Socially Responsible Investment Committee (SRIC) that would set standards related to how we invest our endowment. This fall, I may have reached out to you to encourage you to be part of an ongoing effort to ensure that our University implements socially responsible investment (SRI) practices. And, hopefully, later this year I may be able to invite you to an open forum to discuss SRI with administration.

As one of the leaders of the SRIC initiative, I’m writing this partially in response to two Maroon editorials that consider the recent SRI proposals as betraying the vote of the student body, but I am also writing this as an open invitation for the 80% of the student body who voted in favor of an SRIC to take action. I’m inviting you to take action because last year I may have also let you know that as of 2008, our University—the place we call home—is invested in Arch Coal, a company that performs mountain top removal. Or, I may have mentioned our investment in HEI, a hotel management company that is cited by the NLRB as violating workers’ rights. I’m inviting you to take action because how we choose to live together as a University community affects how the rest of the world gets to live.

The major idea behind both of the proposals we discussed with administrators last week was to utilize time with major players in University policy as effectively as possible. Last spring, in a meeting with the same administrators and the Chairman of the Board of Trustees, the idea of an SRIC was adamantly shut down. Regardless of whatever rhetorical abilities that I may or may not have, I’m fairly certain of my inability to change these administrators’ minds in a half hour meeting a mere four months later. Instead, the students working on the SRIC campaign, myself included, designed two proposals that are related to SRI, albeit more limited in scope. But, as I hope to show, support for the proposal and support for a SRIC aren’t mutually exclusive—they’re compatible and entirely complementary.

The first proposal discussed last week was a proposal for investment transparency on practices related to Environmental, Social, and Governance factors (ESG). Many firms that offer SRI services utilize ESG metrics to screen investments, not only for responsible investing purposes, but for financial ones as well. For example, if an investor was paying attention to environmental metrics in 2009, they would have known to get their money out of BP before the oil spill in 2010. A common way for institutional investors, such as universities, to understand how firms are utilizing these metrics is through questionnaires. We based our questionnaire off of the one used by the New York City Employee Retirement System. As confirmed by CIO Schmid, if the University requests fund managers to fill out a questionnaire, they will. They, of all people, know to listen when money talks.

No, this questionnaire isn’t a direct request for an SRIC. And no, this proposal does not call for the University to adopt ESG screens on their investments. However, far from betraying the intent of the original SRIC proposal, this one provides the University community with wanted information related to investment practices and offers the University administration space to take a step in the right direction and, more importantly, a step they’re currently comfortable taking. Furthermore, this proposal is also responsive to how our University invests its money. In the spring, we were told by administration that we don’t have any direct holdings—meaning that our money is pooled with others’ and then invested in a myriad of asset classes and companies. This is not to say that a higher level of transparency is impossible, it’s just to say that it would be much more difficult and that this level offers a good first step.

The second proposal called for the University to transfer a small portion of its endowment currently held as cash or cash-like assets into a Community Development Financial Institution (CDFI). And because the CDFIs we suggested are FDIC insured, there is little financial risk in doing this. If the CDFI fails, we get our money back. Since money held in banks is already low-risk, low-return, holding money in a CDFI wouldn’t hurt those returns. While this proposal doesn’t address questionable investments the University has, it does address the questionable actions of mainstream financial institutions in which it may hold its money. It also offers a real opportunity to put capital into communities in a way that allows for those communities to remain autonomous.

In the same way that you and I don’t have control over what banks do with our money when it’s there, the University wouldn’t have control of what these CDFIs do. And because CDFIs focus on keeping capital within communities through ways such as microloans, holding money in one is an investment in communities. Most importantly, though, it creates an opportunity for the University to begin moving some of its money in a way that is reinforced by what the Office of Civic Engagement is already doing.

It saddens me to hear that some feel as if the SRIC movement has been co-opted by a few leaders. I love the idea the Maroon proposed of an open forum and encourage all concerned members of the University community to take part in this movement. Students working on this campaign meet every Sunday. And we don’t envision these proposals as the end, but the beginning. If you care about what the place you call our home is doing with its money, get involved. Our efforts can only be as large as the power behind them, so the more we can do together the more we can do ,period. And there is a lot we can do to gain ground in socially responsible investment at the U of C.

 Caitlin Kearney is a fourth-year in the College majoring in Public Policy Studies.