Divestment: Don't Bother

By Kale Bongers | Tuesday, June 1, 2004

Since the College's struggle for divestment from South Africa in the 1980s, shareholder responsibility has been a key watch-word among campus activists. Recently, in response to continued concerns, the College formed the Advisory Committee on Investor Responsibility to promote ethical investments and guide the administration and Board of Trustees on the matter. In doing so, Dartmouth joined the small group of elite colleges and universities—including Stanford, Williams, Brown, Columbia, and Yale—to have such committees. The Dartmouth ACIR, chaired by Religion professor and Ethics Institute head Ron Green, is comprised of student, faculty, and staff representatives concerned with the "exercise of the College's shareholder rights"—in other words, decisions Dartmouth faces on corporate matters put to vote in the large, publicly traded companies in which it has invested. Since between thirty and forty percent of Dartmouth's multi-billion-dollar endowment is invested in such companies, the ACIR is "in the College's economic interest," according to Green.

Surprisingly, a repeated theme of the meeting's early phase was that of moderation and restraint. The members of the committee, Green noted, "don't want to get into the morals police." Green also added that the ACIR is "interested in moving corporations forward in a responsible manner," but that the committee was not intended to deal with issues of divestment or pre-approval of investment, which are left to the Trustees and the College's Investment Office. The committee could actually increase the endowment's profitability, Green claimed, referring to shareholder resolutions in which companies were encouraged to study the effects of so-called greenhouse gases on future business (the ACIR voted in favor of six such resolutions in the past year). While this example and the issue of global warming are subject to debate, it is clear that on some resolutions, the ACIR did in fact vote down unprofitable propositions.

Yet maximizing profit did not seem to be a theme of all of the committee's decisions. For instance, the ACIR voted unanimously to support a resolution asking Chevron-Texaco to prepare an in-depth report on its environmental impacts in Ecuador. However, since the government of Ecuador released Texaco from all liability in 1998, it is doubtful that the concerns of this resolution are financial. This action by the committee, as Green admitted, was to "address environmental damage regardless of local laws." Now, that sounds almost like the "morals police" Dartmouth students were promised the ACIR would not become.

The most worthwhile action taken by the committee thus far has not involved voting the college's shares, but rather the partial opening of the College's investment records. These records are available for viewing to any member of the Dartmouth community at the Investment Office's headquarters (7 Lebanon Street, Suite 305) during regular business hours. While not providing monetary figures for the investments, and though the records only show holdings from the end of the last fiscal quarter, they do contain the names of all publicly-traded corporations in which the College has invested. Due to the relative obscurity, however, the records have seen scant traffic this term, with two lonely signatures preceding mine on the confidentiality agreement that all viewers of the investment records are required to sign. Even though the Investment Office workers repeatedly ask for student identifications and shoot strange looks, interested students should use their chance to become more informed of the financial workings of our administration.

Perhaps the most disturbing aspect of the ACIR, however, is its feel-good, accomplish-little nature. Though the committee has moved toward greater fiscal transparency through efforts to publicize the investment records, they have done little of substance apart from that. Shareholder resolutions are, by their nature, almost always doomed to failure. Of those put to a vote, few get more than five- to ten-percent of the shareholder vote—far from the majority needed to pass. Indeed, the closest vote any member of the committee could remember was a seventy-thirty split—against the resolution. Committee members could not recall any shareholder resolution that passed by stockholder vote. The shareholder resolutions that have been adopted by large corporations have typically been accepted and implemented without a general shareholder vote, and usually with some support from high-level management. Additionally, because the College owns only small amounts (significantly less than one percent, usually) of these corporations, the College would have very little impact on a vote even if it were to pass. Dartmouth's Advisory Committee on Investor Responsibility is spending money on "expensive" notification service software and using administrative assistants' College-paid hours for issue research—all to use the College's meager shareholder votes on resolutions that will never pass. It just seems a bit, well, irresponsible. Perhaps committee members should first look to the ACIR itself and judge whether the committee is a wise investment.

Divestment: Don't Bother

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