April 22, 2004
Forget Sit Ins: Student Activists Now Promote Socially Responsible Investment
by William Baue
Students and alumni from 22 prestigious colleges and universities launch the Responsible Endowment
Coalition to urge schools to practice socially responsible investing.
College campus activism was born in the 1960s when students occupied administration buildings to
address issues such as the Vietnam War, civil rights, and free speech. In the 21st century,
student activism seems to have matured. Student activists are now scrutinizing university and
college endowment investments to reveal whether or not the companies financed practice the kinds of
social justice and environmental stewardship professors lecture about in the classroom.
Today, a group of students and alumni from 22 colleges and universities with combined
endowments exceeding $56 billion is launching the Responsible Endowment Coalition. Represented in the group
are some of the country's most prestigious schools, including five of eight in the Ivy League
(Brown, Columbia, Dartmouth, Pennsylvania, and Yale) and four of the six "Little Ivies" (Amherst,
Middlebury, Swarthmore, and Williams). The coalition advocates for their schools to practice
socially responsible investment (SRI).
"Colleges and universities pride themselves on
offering an open environment for discourse where information and ideas can flow freely," said Mark
Orlowski, a Williams senior who co-founded the group with Duke, UPenn, Swarthmore, and Barnard
students. "Those principles should not stop at the investment office's door."
intersection of faculty liberalism and institutional conservatism can create a contradiction
between academic ideals and economic priorities. The coalition seeks to reconcile this apparent
"In order to be consistent, universities and colleges need to align investment
decisions and shareholder votes with their educational values and with research results recognized
by their scholars," Mr. Orlowski told SocialFunds.com. "For example, scientific research about the
threat of global warming and the health dangers of smoking tobacco has been widely accepted in
higher education, yet this research is often ignored when it comes to investment priorities and
Several of the coalition members are also involved in a 70-campus campaign asking Farallon Capital
Management, one of the countries largest hedge funds, to dialogue and disclose how it invests
university endowment assets (see related article). Last week, the
campaigners announced a "National Day of Action for Transparency in University Investments."
Transparency is one of the biggest challenges facing the Responsible Endowment Coalition as well.
"Probably the biggest obstacle that most of us have faced is the difficulty in getting
access to information, which is closely guarded by investment offices and university officials,"
said Mr. Orlowski. "Yale University is an example of a school that has tended to actively block
student engagement and dialogue."
Yale's Advisory Committee on Investor Responsibility
(ACIR) meetings and its proxy voting record are closed to the public. In contrast to Yale's
paternalistic approach, Williams' Advisory Committee on Shareholder Responsibility (ACSR) opens its
meetings to the community and publishes its proxy voting record for students and alumni online.
Williams also offers alumni an SRI option for contributing to the endowment via a Social Choice
Fund, which has reached $10,000 in assets since its 2001 inception.
Another challenge is
the perception amongst university trustees that fiduciary duty precludes SRI, which they mistakenly
assume will automatically lower returns. Coalition members hold the opposite opinion in both
cases: they believe that fiduciary duty requires trustees to assess the potential impact of
social and environmental issues, and that such due diligence stands to protect financial
"I think that college and university trustees should recognize that taking
social and environmental factors into account is a necessary component of fiduciary
responsibility," said Mr. Orlowski. "For example, if corporations ignore the impact of global
warming in their business planning, they can be vulnerable to the impact of climate risk on their
He cites reports issued by the Coalition for Environmentally Responsible
Economies (CERES) documenting the financial
risks of climate change, and points to the recently- formed institutional investor group, the
Investor Network on Climate Risk (INCR).
"While leading pension funds have joined in this effort, so far no university or college has
become involved," Mr. Orlowski said. "Neglecting to take these risks into account is neither
prudent nor responsible."
"As recent corporate scandals have shown, it is necessary for
shareholders to be proactive--otherwise they are vulnerable to the financial consequences," he