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The Carletonian

The Carletonian

In This Divestment Debate, Don’t Forget the Last One

<rleton Responsible Investment Committee (CRIC) was established in 2005 to make recommendations to the Board of Trustees on the management of the College’s endowment. An official college committee consisting of students, faculty, and staff, CRIC hopes to accurately and convincingly express our community’s important values on a diverse range of subjects. Our committee must also be aware of new movements on campus and gauge how these changing views and opinions should be reflected in the management of the endowment. The recent interest in fossil fuel divestment--to choose not to include holdings in the top fossil fuel companies in the endowment--is not a new development, but has its roots in Carleton’s past. Unfortunately, the exact facts, figures, and results of this history have not always been accurately expressed, hampering attempts to place the topic in its correct context.

From the late 1970s through the early 1990s, a similar divestment dialogue took place surrounding the apartheid issue in South Africa. The apartheid stood as a stark reminder of the colonialism and racism that encompassed much of Africa, and provoked many to question why the College would continue to hold investments in a country acting in a manner so contrary to its beliefs of justice and equality. A campus-wide debate on the issue in 1977- 1978 led the Board of Trustees to form a South Africa study group, consisting of one professor and three students, who extensively studied the issue and recommend selective divestment from companies doing business in South Africa, according to the September 25, 1978 issue of the Carletonian. The Board of Trustees largely accepted this recommendation, using the Sullivan Principles of 1977 as the basis for their new policy. This plan allowed the College to divest from firms that were actively segregating in the workplace, a common manifestation of the legislatively sanctioned discrimination in South Africa. According to an article published in the Carletonian on May 12, 1989, the endowment also divested from any corporation that had “significant sales to the South African police or military authorities,” even if these companies satisfied the Sullivan Principles. It is important to note that the Board of Trustees extended this to companies whose primary business was in South Africa as well, including the many justice, martial, and financial institutions in line with the apartheid regime, as not- ed in the minutes from a meeting held on October 7, 1978. This led to the divestment of nearly $20 million in government bonds and equities of financial institutions involved directly with the regime, including big names like Wells Fargo.

As debate on the issue continued into the 1980s, a College Council Task Force consisting of trustees, faculty, staff, alumni, and students was established in 1985 to re-investigate the matter and eventually resolved against total divestment. In its majority opinion, this body concluded divestment would have “financial risks which are difficult to justify in that the continued financial health of the college is itself a moral good. Total divestment would be symbolic…[and] motivated by political considerations outside of the mission of the college.” The Task Force explicitly noted “the likely financial losses arising from total divestment could, in the opinion of many, not be recovered,” according to a Carletonian article from January 10, 1986.

As discussion continued, the Coalition for Responsible Investment (CRI), a pro-divestment group formed in the 1980s, began to advocate for divestment from all companies with any economic ties to South Africa. In February 1987, CSA voted 14-2 for divestment, and the College Council followed suit with a 10-7 vote in April, according to a Carletonian article from October 30, 1987. The Board of Trustees declined to embrace total divestment in its May meeting, but did agree to divest in companies who did not attain the highest standards under the Sullivan Principles and create a new Board subcommittee to examine the issue further. Protest and debate still persisted, eventually climaxing when twenty-five students and six faculty and staff members, who demanded to read a prepared statement in favor of total divestment, blockaded the October 1987 meeting of the Trustees, according to a Carletonian article from October 30, 1987.

At the time, President Stephen R. Lew- is Jr. maintained that the Board’s policy already went further than most institutional investors and stated that they worried that this action would “move the College too far in a direction of advocating specific actions of national policy that were unrelated to Carleton’s principal activities and would thereby put at risk the College’s independence from political interference,” as noted in the October 30, 1987 issue of the Carletonian. He also argued for the continued use of proxy voting, feasible only through directly holding stock in a company, as an effective way to continue pushing for change. This tradition has continued to grow since 1989 and is one way that CRIC has expressed the College’s opinions to large, multinational corporations.

By choosing to work with companies arguably operating responsibly in South Africa, James Shoop, a former Director of College Relations wrote in an October 1989 press release that the Board “wanted to focus on positive actions that would be helpful to South Africa in moving toward a democratic and post-apartheid society.” A complete divestment from South Africa by the West and institutions like Carleton would have resulted in severe economic repercussions for both blacks and whites in the country. The College’s policy chose to explore other avenues for action in order to prevent a “flight of capital” situation, similar to the irreversible damage currently taking place in many West African nations ravaged by the Ebola epidemic. It is interesting to note that CRI did not call for the speedy divestment of assets from other conflict zones–like Russia, Iraq, or China–during the same, tumultuous time period.

The trustees’ policy on divestment in South Africa acknowledged not only their fiduciary responsibility to preserve and develop our institution, but also the importance of acting in alignment with the College’s values. While partial divestment was selected, the fiscal well-being of Carleton was always a prime consideration. An endowment is not just a large number to flash in front of alumni or prospective students, but is the financial backbone of large, complex educational institutions. A reduced endowment brings with it many repercussions, such as reduced faculty and staff salaries, fewer building upgrades, and, most importantly to students, smaller financial aid packages. The trustees and the College Council Task Force had to consider all of these variables when devising their response to the South African issue.

It is my sincere hope that the current divestment dialogue continues to provide new perspectives on a dynamic and evolving topic.

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