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From the Daily: An ethical investment

BY THE MICHIGAN DAILY

Published March 26, 2014

Led by Students Allied for Freedom and Equality, the movement for the University of Michigan to investigate its financial investments has received significant and well-deserved attention on campus. In the last few weeks, SAFE has raised legitimate concerns about the University’s ethical standards for investment, calling attention to alleged human rights violations by companies the University has invested in. The activism led by SAFE and its allies is admirable, as the group has brought to light disturbing questions about the University’s behavior. The University cannot allow the allure of profits to muddle the school’s ethical standard. As with all of its actions, the school must hold itself to a fundamental morality when making financial investments.

Last Tuesday, the Central Student Government voted to indefinitely postpone a vote on Assembly Resolution 3-050, which was proposed by members of SAFE. The resolution called for CSG to petition the Board of Regents to create an ad hoc committee to investigate University investments in companies accused of violating human rights, including General Electric, Heidelberg Cement, Caterpillar Inc. and United Technologies. The CSG Student Assembly voted to indefinitely postpone a decision on the resolution.

CSG’s refusal to vote on the resolution was a failure in the institution of student representation. Student government has a responsibility to listen to the demands of the student body. The student government is not bound by any requirement to only represent a majority voice on campus. In fact, as the representative body, CSG is obligated to highlight the perspective of minority and underrepresented groups. A blind endorsement of the majority prerogative is to create a dangerously homogenous voice. The University of Michigan is a diverse institution that values all points of view, and the student government should act as such.

By refusing to even allow a robust debate on the proposed resolution, the CSG Student Assembly effectively ignored the very constituency they were elected to represent. Furthermore, by enacting an indefinite postponement and thus denying future dialogue, CSG not only failed to listen to students, but effectively silenced SAFE and the 37 student organizations in support, a significant student voice on campus. With CSG presidential election polls closing tonight, the next administration needs to take steps to ensure that this injustice does not happen again.

The University’s investment strategies must adhere to a code of ethics. Currently the school has an existing President’s Advisory Committee on Labor Standards and Human Rights in which the University vests power to protect human rights and labor standards in all agreements involving University licensing. It protects several areas of human rights, including labor rights, women’s rights and health and safety standards. While its commitment to social justice wherever the University logo appears is admirable, similarly high standards should be applied to University investments.

As a public institution, created by a government that supposedly charges itself with the pursuance of human rights, the University has a responsibility to continuously monitor all investments that may be contradictory to its values. By investing in companies that are engaging in human rights violations, the University is complicit in those actions. Failure to monitor ethical issues surrounding its investments indicates detrimental moral values and a solely profit-motivated mindset on the University’s part. As a state-funded institution, the University must be ethically proactive in all of its actions. Failure to adhere to these ethical guidelines is a direct contradiction of the University’s commitment to social justice issues.

In order for the University to create an ad hoc committee, three conditions must be met. According to the CFO’s statement on University investment, there must be a general campus consensus, the organization, industry or entity in question has demonstrated behavior antithetical to the core mission and values of the University and these bodies can be proven to be responsible for their implications. However, these requirements are unnecessary. These red tape barriers allow the University to keep investing in companies that don’t fit our ethical and moral standards. The University should always have a committee reviewing whether or not organizations, industries or entities we invest in comply with ethical and moral standards — not just when they have already significantly violated human rights.

In doing so, the University would not be breaking new ground. Stanford University’s Statement on Investment Responsibility states its trustees are responsible for taking into account ethical factors when setting investment policies and voting practices to address allegations of “substantial social injury” while investing, or considering an investment in corporations.

Columbia and Harvard University each also have an Advisory Committee on Shareholder Responsibility comprised of four faculty members, four current students and four alumni. These committees formulate recommendations on what social, environmental and political policies that shareholders should support. This information is then relayed to other committees who determine proxies on social issues. The committees occasionally investigate investment and divestment policies as well.

In 2009, several students advocated for the creation of a similar group at the University without success. It is vital that the University establish a system similar to the ones enacted by Harvard and Columbia. The committee must directly acknowledge the interests of the student body and alumni while making investments, especially considering its vast student body and the diverse communities it encompasses.

As a leading institution of higher education, we have a duty to be aware of issues outside of campus that challenge our moral obligations. We commend any student group that calls on this institution to live up to the high ethical standard that it sets for its students, and indeed itself, in so many other areas. If nothing else, SAFE and its allies have re-centered the campus conversation on the balance between the University’s financial interests and moral imperatives. Any company complicit or duplicitous in human rights violations is unworthy of our investment and the many exemplary individuals who have helped build the endowment over the course of generations. To that end, the University needs to institutionalize a permanent mechanism to evaluate complaints against companies that are suspected of doing business with unethical regimes. A committee composed of faculty, students, administrators, alumni and community members can dutifully and thoroughly evaluate these claims and publicly recommend to the Board of Regents whether or not these companies merit divestment or other sanctions. Until such a committee is established, willful blindness will continue to be a poor substitute for defining leadership on one of the pressing issues of our time.

The editorial has been updated to its most recent version.


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