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December 04, 2002
SRI Gains Momentum in University and College Endowment Investments
    by William Baue

U.S. academic institutions are increasingly applying socially responsible investment principles, although not comprehensively.

Universities and colleges play unique roles in society. As educational institutions, they instill students with moral values; as institutional investors, they can wield significant influence as large shareowners. Universities and colleges have traditionally kept the moral and financial spheres separate, but recently, academic communities have sought to reconcile their institutions' financial statements with their mission statements.

Many universities and colleges have created committees to address how the institutions' endowment and pension investments may relate to global social and environmental concerns. These committees typically assess shareowner resolutions and determine how the institution will vote its proxies. Such committees have existed for a number of years at institutions such as Harvard, Yale, Stanford, and the University of Minnesota. Dartmouth College is currently in the process of establishing such a committee, and Columbia University established its Advisory Committee for Socially Responsible Investing in February 2000. Harvey Goldschmid, who chaired the Columbia University committee until his appointment as a Securities and Exchange Commissioner in May, specifically limited the Columbia committee's role to voting shareowner resolutions.

Swarthmore College's Committee for Socially Responsible Investing, created in 1997, went one step farther by filing a shareowner resolution with Lockheed Martin (ticker: LMT) this proxy season. The resolution called on the weapons manufacturer to prohibit discrimination based on sexual orientation and received 5.9 percent support from voting shareowners. On November 18, Swarthmore informed Lockheed of its intention to refile the resolution in the 2003 proxy season. Three days later, the company reversed its position opposing the resolution and issued a statement to its employees that announced its intention to add sexual orientation to its equal employment opportunity policy.

"This really shows the power that shareholders have to bring about positive social change," said Swarthmore Treasurer and Vice President for Finance Suzanne Welsh. "Among colleges and universities with significant endowments, our status as shareholders is an opportunity to influence society. I hope the college's action helps lead the way for similar efforts in the future." Swarthmore's endowment is $850 million, down from $1 billion in September 2000.

Earlier this year, Williams College took its first step in implementing SRI criteria by establishing the Social Choice Fund, which is invested in the Calvert Group's Social Investment Balanced Fund (CSIFX). When Social Choice Fund assets reach $10,000, Williams will invest ten percent of the fund's holdings in a community development loan fund specifically geared toward supporting the Berkshires, the region that encompasses Williams College. Currently, the fund represents a mere fraction of the college's endowment, which was $1.109 billion for the fiscal year ending June 30, 2002.

Hampshire College, a progressive liberal arts school with a small endowment, is one of the very few academic institutions to comprehensively practice SRI with its endowment investments. However, no U.S. university or college with a significant endowment has yet joined Hampshire in comprehensively applying SRI criteria. Social investors will watch with interest to see which academic institution with a large endowment will take the lead and grant its committee the power to adjust endowment portfolios based on social and environmental criteria.


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