The list of colleges that have decided to use their investments to protest the genocide taking place in the Darfur region of Sudan got longer last week, and experts predict that the tally will continue to grow.
The University of Pennsylvania became the latest institution to adjust its investment policy, spurred by a yearlong national student movement.
Experts say higher education has not seen activism of this kind since nearly 20 years ago, when colleges pulled their investments from companies with ties to South Africa, when that country was enforcing apartheid. Now the atrocities in Darfur have prompted similar divestments in companies that do business with the Sudanese government, which is accused of sponsoring militias that have killed, raped, and abused thousands of non-Arabs living in the region.
Penn’s decision was preceded this month by similar announcements by Princeton University and Williams College, both of which decided to refrain from investing in certain companies that do business in Sudan.
Every institution that has announced such plans has made it clear that divestment is not a tactic that will be used lightly. Indeed, strong evidence suggests that divestment — and socially responsible investing in general — is far from a growing trend for higher-education money managers, whose primary goal is to look for the best returns. According to an annual survey of college endowments by the National Association of College and University Business Officers, about 72 percent of institutions do not consider social responsibility at all in their investment-management policies.
Even so, Mark Tulay, director of environmental, social, and governance markets for Institutional Shareholder Services, a provider of corporate-governance services, says that on July 1, his company will begin providing lists of companies that do business in Sudan, with documentation of their activities in the region.
The demand for such information is great within higher education, he says. “We’re not providing recommendations for policies,” he says. “We’re just providing the research. The colleges use the information to make decisions based on their values, not ours.”
Chosen Companies
The current divestment movement got its start last year, when students began organizing campus chapters under national umbrella groups like Students Taking Action Now: Darfur, which began at Georgetown University, and the Sudan Divestment Task Force, which originated at the University of California at Los Angeles.
The student activism succeeded in prompting college officials to make a series of investment-policy changes. In April 2005, under pressure from students, Harvard University announced that it would divest stock in China National Petroleum Corporation, a business partner of the Sudanese government. Oil is a crucial source of revenue for the regime, but the industry provides little direct benefit to Sudan’s people, making it a target for divestment.
Harvard, with an endowment of $25.9-billion, owned an estimated $4.3-million worth of shares in PetroChina. The divestment — followed a year later by Harvard’s withdrawal of $8.3-million of holdings in Sinopec, another Chinese oil company — was called symbolic by students and faculty members involved in the campaign. But many agree that the decision spurred other institutions to follow suit.
“Harvard set a crucial precedent,” says Eric Reeves, an English professor at Smith College, who has been heavily involved in encouraging institutions to divest and has written extensively on Darfur. “Since then there has been nothing symbolic about it — each decision has been more comprehensive than the last.”
The institutions that have followed suit are among those with higher education’s largest endowments, including Brown, Stanford, and Yale Universities, as well as Amherst, Dartmouth, Smith, and Swarthmore Colleges. In March the University of California system agreed to divest shares of nine public companies with Sudanese connections.
Student groups like the Sudan Divestment Task Force have done most of the research that has led colleges to reconsider their investment policies. Adam Sterling, a senior at UCLA who leads the chapter on that campus, is helping other students at other colleges achieve the same results.
Research, Not Protests
“I feel like the campaign represents a new wave of student activism,” he says. “We have the research and the know-how, and we’ve been able to utilize the national press.”
The activist students have taken it upon themselves to become experts on the issue. They have used events like rallies sparingly, opting instead for business suits and negotiations.
“We spent six months making sure that we had an answer to everything — we have more than 500 pages of reports, tools, and analysis,” says Mr. Sterling. “Through this research, we found ourselves giving reports to colleges across the country and being taken seriously as an organization — as equal players with presidents and investment staffs.”
The divestment groups decided early on that taking a moderate approach, urging colleges to sell off their shares in companies that are most harmful to the people of Sudan, would get them farther than demands for a sell-off of holdings in companies that may actually be providing needed services in the region.
“The model we used to request divestment is a compromise,” says Mr. Sterling. “It works because it’s embraced by the fiduciary side.”
Daniel Millenson, a sophomore at Brandeis University who is involved in the divestment task force nationally and on his campus, agrees. “We show them which companies are the worst offenders and why,” he says. “It’s more effective because it’s less likely to hurt an endowment.”
Mr. Millenson and Mr. Sterling are traveling across the country, not only sharing their research with college leaders and students but also promoting state and local legislation that would bar investments of public money in Sudan. Already Illinois, New Jersey, and Oregon have divested. So has the California State Teachers’ Retirement System.
The students say they plan to keep pushing at every level, hoping that as large institutional shareholders get rid of their Sudan-related assets, demand for shares in the companies will dry up, prompting them to stop helping the Sudanese government sponsor the violent militias.
Mr. Reeves, the Smith professor, is optimistic that more colleges will make divestment announcements in the next year. “I’m convinced that there is irresistible momentum,” he says. “Everywhere I go, divestment is in play. And any decision being made is a decision to divest.”
http://chronicle.com Section: Money & Management Volume 52, Issue 43, Page A17