 |
 |
 |
faculty students alumni courses major/minor requirements internships study abroad newsletters/journals
Environmental Studies Department |
|
The Mac Weekly - April 22, 2005 Quality Control: Socially Responsible Investing at Mac By Paul Dosh and Natalia Espejo, Contributing Writers
Brazil officially ended slavery in 1888, but in 2004, thousands of slaves in the Amazon state of Para produced much of Brazil’s $372 million in hardwood exports, such as cherry wood. Through the use of independent auditors, Home Depot reduced its purchase of slave-harvested wood, but companies like Knight Ridder refuse even basic steps, instead choosing to look the other way as Brazilian walnut decks and docks swell their profit margins. In 1994, the U.S. Congress banned new development of low-yield nuclear weapons, but in 2004, with a wink, a nod, and a $15 million research allocation from the Rumsfeld Pentagon, Lockheed Martin subsidiary Sandia Corporation patented a Robust Nuclear Earth Penetrator. This “bunker buster” can pierce 35 feet of reinforced concrete to deliver the “needed neutralization.” Nuclear stockpiling may be past its time, but it still delivers to Lockheed stock’s bottom line. And in Massachusetts, Fed-Ex continues to cite federal law as justification for its choice to withhold equal benefits from legally married gay employees. Joining Fed-Ex’s discrimination are General Dynamics and Adecco, as well as the mean-spirited Caritas Christi, which dumped its inclusive insurance coverage in favor of a plan that would permit discrimination. Is it appropriate for Macalester to profit from these practices? Or are some companies, practices, and industries so objectionable that even a community as complex as Macalester can agree to exclude them from the college’s investment portfolio? Socially Responsible Investing (SRI) is on the rise, and in 2004, students at Amherst, Middlebury, Swarthmore, Williams, Brown, Columbia, Dartmouth, Pennsylvania, and Yale formed an intercollegiate coalition dedicated to pressuring their administrations into aligning their investment portfolios both with educational values and with the findings of scientific research conducted by faculty (e.g. global warming, public health risks of tobacco). At Macalester, both the Legislative Body and the Board of Trustees have articulated the importance of social responsibility, but the College has yet to develop a policy that institutionalizes a commitment to SRI. Officially, Macalester seeks to avoid investments that cause “grave social harm,” but this criterion has been invoked only once in the entire history of the College, during the divestment campaign against apartheid in South Africa. Hence, in practice, Macalester relies on a single decision rule for investing: economic return. That’s it. Economic return. We argue that this is unacceptable—that it represents a forfeiture of Mac’s opportunity and responsibility to manage its financial investment in a socially responsible way. A large portion of the College’s investments is tied up in index funds, whose complex nature does make them difficult to screen. A smaller portion of our investments, however, consists of individual holdings in specific companies. Macalester’s current approach to SRI relies on a scheme of informed shareholder voting. With this approach, Mac aims to thoughtfully vote on proposed resolutions presented at shareholder meetings. For example, in the upcoming Coca-Cola shareholder meeting, Macalester (as a Coke shareholder) will endorse a resolution instructing Coke to permit an investigation of human rights violations in its Colombia bottling plants. Most social responsibility-related resolutions, however, do not pass. Those few that do pass often mandate impact studies and other minor measures, yielding little change in corporate behavior. In contrast to the current approach, we argue that Macalester should “vote with its feet.” If we oppose, for example, the manufacture of civilian-maiming cluster bombs, then buying stock in Edina-based Alliant Tech and urging them—year after year, while collecting dividends—to get out of the cluster bomb business, strikes us as a spectacularly ineffective and backwards approach to socially responsible investing. Rather, we should avoid Alliant Tech altogether and instead invest in industries in which we believe. Voting with our feet means adopting investment screens, which will allow us to modify our portfolio to reflect our commitment to or rejection of particular values. Screens can reflect a variety of political views, both liberal and conservative. For example, companies like Sierra Club Mutual Funds and the Greens Century Fund screen investment options for non-institutional investors that favor companies whose polices promote sustainable development. By contrast, the Ave Maria Catholic Values Fund removed Eli Lilly from its portfolio because of the corporation’s support of Planned Parenthood. Although we have mentioned a few provocative possibilities—slavery, WMD, discrimination—our purpose is not (yet) to argue for specific screens, but rather for a change in Macalester’s overall policy. Our diverse community values ensure that debate over specific screens will be spirited, and a democratic process aimed at elucidating Mac’s community values will certainly produce some outcomes that do not satisfy our particular ethical standards. But we would be far happier belonging to an institution that was purposeful in its investing choices—one that had taken a stand—rather than abdicating this important responsibility to “the market.” The student body and the Macalester community at large must begin a conversation about sincere socially responsible investment. Consensus can be a tough standard—after all, the current approach of “economic return no matter what” lacks a community consensus—but consensus does not require that we all agree, only that we all agree to compromise on an approach with which we can all live. Screens offer an excellent tool for a school that strives to catalyze social change. Additionally, embedding social responsibility into our identity represents an important step toward keeping socially conscious alumni engaged and enthusiastic about Macalester as an institution. We look forward to your comments on the merit of investment screens at Macalester, as well as your ideas for particular screens. |
|
|