|(l-r) Jonathan Scott, Marlene Fried, Beth Ward, Stan Warner prepare for the presentation (not in picture: Ken Rosenthal)|
This afternoon, members of a Hampshire College ad hoc committee on socially responsible investing, formed in 2009, presented their long-awaited report to the community. The process, already drawn-out because of administrative transitions and other unrelated internal issues, was further delayed by the unusually early snowstorm this fall, which prompted the closing of the campus and evacuation of students. Although first scheduled for November 3, the meeting thus took place over a month later.
In part for that reason, attendance was low. Classes ended last week, and most students either had gone home or were working furiously on their final papers. There were barely two-dozen people (excluding the five presenters) in the large lecture hall—which, by contrast, was filled to capacity last February, when an Israeli soldier spoke about his experiences (or tried to), prompting one of the fiercest campus controversies (1, 2, 3, 4) over an issue that accounts for the great interest in what would otherwise be a matter mainly for the policy wonks and number-crunchers.
I counted only three students and three members of the faculty. The others present were from the staff or administration of the College. Again, the season had much to do with this. Still, the difference is telling: people will more readily turn out for a protest than a policy presentation.
The formal name is: Policy on Environmental, Social and Governance Investing (ESG).
I’ll be posting more extensively later about the entire document, but here’s the initial take-away. The content matched what I predicted, and it on the whole looks very good.
• Process and Product
Part of the task was to break down an unwieldy older document (last revised in 1994) into more logically consistent components, separating overall policy from more specific guidelines and operating procedures. Nothing earth-shattering or controversial there.
The committee members at several points took pains to make clear, however, that even during the period of review, the College had never dropped its policy on social responsible investment practices. Rather, it had simply set aside the old oversight committee and the specific document that governed its operation.
Most people will of course be most interested in the actual content, which can be summarized with relative ease.
In part because of its relatively small endowment, Hampshire conducts its investments through various existing managed funds, which contain stock in a number of enterprises. The College seeks funds whose holdings most approximate its values, but can in addition apply various “screens” in order to further refine what it actually invests in. In some cases, we use existing screens developed by other parties, but it is the ESG that ultimately constitutes the guidance for the fund managers.
Put briefly, the document treats investments from both the positive and the negative standpoint: things that we wish to support, and things that we do not wish to support. In the former category, for example, are firms that provide necessary goods and services in sustainable ways, firms that uphold human and environmental rights, firms that enhance the quality of life and social justice, or support education.
In the latter category are firms that either seriously violate accepted norms of justice and sustainability or simply engage in activities whose net effect is destructive or at the least might not be seen as a value that the college actively needs to support. Thus, for example: on the one hand, firms that practice discrimination or have poor labor, health, or environmental records, or on the other hand, firms that engage in military production, etc.
Merely participating in, say, some form of military production, however, is not necessarily enough to preclude an investment altogether, especially in an age in which a given firm may engage in a wide range of activities. The College can therefore assess individual cases using a “threshold” measure, i.e. taking into account the share of revenue that a firm derives from a given activity.
The basic policy fits on a page. The actual guidelines are five times as long.
In summary, the document arguably sets new standards of rigor and accountability. Consultants who have examined it call this policy “the strongest and most all-encompassing” that they know of. Hampshire College thereby assumes a leading national role in yet another area of higher education.
Because controversy involving investment in firms doing business in or with Israel was the proximate cause that led to the review of the investment policy, this was arguably the topic that will be of the greatest interest to the outside world as well as many members of the College community, even though this question plays no role in the old or new policy, proper.
Although the committee members did not explicitly raise the issue themselves, they did on more than one occasion make statements that clearly addressed the matter, e.g.
“we don’t divest from countries, we divest from firms"When a student explicitly raised the question, former Interim President Marlene Fried stated that the College’s views on what occurred during the 2009 divestment controversy and the interpretations were quite different. Bottom line:
“There is clarity and unanimity on the Board that it did not make a decision to divest from the State of Israel, that it did not decide that Israel was in the same camp as South Africa.”That should be the end of that story—but you can bet that it will not be.