Repository: UIHistories Project: Board of Trustees Minutes - 1972 [PAGE 494]

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484

BOARD OF TRUSTEES

[January 19

have stated that they have "no moral or legal right to speak for diverse elements of the Stanford community on controversial social, economic, and political issues.'" In addition to the diversity of views involved, there is also the problem of which groups are considered to be a part of that constituency. Is it limited to faculty and students? May research personnel, clerical, and other staff be involved? Are the alumni entitled to seek a voice in such deliberations? In the public institution, should the taxpayers and the legislature be considered? Whether public or private universities are involved, should those who pay tuition be allowed to participate? C. What action should be taken f Should the stock be bought on the basis of questions of social responsibility? Should the stock be sold? Should the stock be voted against management? Should the University informally try to persuade management to change policies? Assuming some kind of consensus on a given issue* — and keeping in mind that the precedent, once established, will be difficult to limit — what is the appropriate action to take ? One of the few points of agreement is that sale of an investment is not appropriate; either because it is an abdication of social responsibility which is unlikely to affect in any sensible way the corporation concerned, or because it is likely to cost the institution money in transaction costs or loss of a profitable investment. University investors seem to agree as well that buying stock on the basis of social criteria cannot be justified when it conflicts with the well-defined duties of the fiduciary. 8 Other questions involve informal attempts at persuasion or votes against management through use of proxies. Although one writer refers to the former as "more reflective of the past than the future" 10 and some public interest groups seem to prefer the more dramatic confrontation of the latter, presumably there is room for a logical chronology involving first, the informal persuasion attempt, and then, as a last resort, the latter. I I I . If a policy p r o v i d i n g for consideration of factors of social responsibility in investments is decided upon, there remains the development of a suitable mechanism for its implementation. At Stanford University an ad hoc committee, made up of three faculty, three students, and three alumni with the University Staff Investment Manager as an ex officio member, would advise the Vice President for Business and Finance in this area. At Wesleyan University, a subcommittee of the ad hoc Committee on the Social Implications of Wesleyan's Investment Policy, made up of the faculty and student representative (of the ad hoc Committee?) and the Treasurer of the University would make recommendations to the Investment Committee (of the Board of Trustees?). At Princeton University, the Resources Committee of the Princeton University Community Council would make recommendations to the Board of Trustees for its consideration and action and to the Council for its information. In all three of these cases, the committees were also given various data collection and research functions to supplement their advisory activities. I V . F o r m a n y of the r e a s o n s of policy a n d procedure set out above, the University of Illinois has traditionally not provided for the consideration of issues of social responsibility in determining investment policy. However, recognizing that some flexibility for response to such questions is desirable, the Finance Committee recommends that the following procedures be adopted: 1. If in the opinion of a faculty, staff, or student group, a particular corporation is engaged in activities which directly result in undesirable social or political consequences, that group should send a statement, incorporating satisfactory

' Stanford University, Report of the Trustees ad hoc Committee on Investment Responsibilities. April 13, 1971. s "There are positions on social and political questions that can be agreed upon by the university community. They would include issues on human rights and human dignity, questions on environmental control and technological safety." Report of the ad hoc Committee on Social Implications of Wesleyan's Investment Policy. 9 Malkiel and Quandt. Also see Report of the ad hoc Committee on Social Implications of Wesleyan's Investment Policy. M Blumberg.