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Caption: Board of Trustees Minutes - 1972
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482 BOARD OF TRUSTEES [January 19 FINANCE COMMITTEE MEETING The President of the Board asked the Chairman of the Finance Committee to convene the Committee to consider a report, "Social Questions and University Investment Policy." REPORT OF THE FINANCE COMMITTEE Upon reconvening, the Board of Trustees considered a report and recommendations of the Finance Committee on "Social Questions and University Investment Policy," and on motion of Mr. Howard, the report as submitted was approved. The report is as follows: Social Questions and University Investment Policy I. I n c r e a s i n g l y , in the last few years, the business c o m m u n i t y has been pressed to reexamine its role in society. Various groups have insisted that corporations accept new responsibilities related to social, moral, and political problems. The constituencies of investing institutions such as churches, foundations, colleges, and universities are, it has been said, less likely than the ordinary shareholder to view profit as the sole criterion for investment to the exclusion of corporate policy with regard to minority employment, pollution, manufacture of weapons of war, product safety, support of "colonial" or Communist regimes, and minority representation in management. 1 Although these institutions, even if allied with other institutional investors, public interest groups, and individual shareholders, may form a small proportion of the body of corporate shareholders, the effect of their efforts has, in some cases, been out of proportion to their numbers. A number of corporations, while not mandated to do so, have made increased efforts to deal constructively with a number of social questions. One of the by-products of the general effort to come to grips with social responsibility and investment has been the accumulation of a body of literature in the form of books, articles, and committee reports as well as institutional policy statements. These have been used extensively in the preparation of this report and they provide a focus on the problem as a whole. T h e principles contained in this literature, however, are not wholly applicable to the publicly-supported university. The most active of nonprofit institutions in taking action to relate social responsibility to investment are the churches. Perhaps their relatively homogeneous constituencies and guiding principles are more easily circumscribed, described, and polled than those of a university. However, some commentators have seen the use of social and moral criteria in investments by a university as endangering its basic purposes. 8 They warn that a formal institutional position on such questions could erode the freedom to investigate and to teach and learn freely, pointing out that the instrument of dissent must be the individual faculty member and student — not the institution itself. Even in the company of more or less analogous institutions, however, the problems involved for the university are difficult ones. Typically, university statements on this question (almost all from private universities) acknowledge that a university must be concerned with moral or social values but conclude that drawing the policy line is difficult. II. F o r the m o s t part, t h e questions t h a t a r e raised resolve into the following: A. How does a university decide whether a corporation's actions merit its reaction? How does one decide which business corporation is at fault — socially, morally, or politically? One paper* has pointed out that a graduate student's report at Harvard singled out Xerox as clearly progressive socially, mainly on grounds of 1 * "Moral Issues in Investment Policy" by Malkiel and Quandt, Harvard Business March-April 1971. a Malkiel and Quandt. 1971. Phillip Blumberg, "The Politicization of the Corporation," The Business Lawyer. July Review,
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