Even before incoming freshmen make their way to Ann Arbor for the first time, chances are they’ve heard something about the University’s colossal endowment. At $6 billion, even after the collapse of the stock market, it’s among the ten biggest endowments of any American university. In casual competition with friends at other schools, I always enjoy mentioning that fact. Taking on a somewhat Freudian tone, I occasionally tease, “My endowment is bigger than yours,” to which my friends tend to supply some witty repartee.
But recently, one friend pointed out that, although our endowment might be huge, some of its component investments are really nothing to brag about. It was something I’d heard before — the University is constantly under some sort of criticism about its investments. This time, however, I felt ignorant about the issues my friend raised and decided to look into the matter.
Upon doing so, I was at once surprised by how extensively the University replied to a vast array of political and ethical concerns on the webpage for its Office of Public Affairs. One could spend hours on that page just reading about all the individual positions the University has taken on social issues, in addition to assorted policies regarding its investments.
A link entitled “Coca-Cola,” for instance, provides PDF files containing correspondence between the University’s chief financial officer and Coca-Cola executives. Upon reading the files, a remarkable narrative unfolds.
In the past few years, the University became concerned about certain unethical practices at Coca-Cola bottling plants in Colombia and elsewhere. The University’s CFO petitioned Coca-Cola to permit an investigation by an unaffiliated organization to explore questionable labor conditions. These efforts led to, amongst other things, improved collective bargaining rights for Coca-Cola workers, contributing to what I found to be a history of ethical investment choices made by the University.
That history started in 1978, when the University chose to divest from apartheid South Africa after the University’s Board of Regents adopted a resolution saying that an advisory committee should be able to evaluate an investment if a serious ethical issue arises. This clause was also invoked in 1999, when then-University President Lee Bollinger led a successful campaign to divest from companies that profited from the sale of tobacco. Both these instances should remain points of pride for us.
Yet, there’s always room for improvement, particularly since the University invests in hundreds of companies each year. Take the case of Nestle, in which the University invested over $6 million in 2008. The Swiss foods company has recently come under fire for a variety of ethical issues ranging from child labor on cocoa farms to price fixing to carrying out business with dictatorships. But what should matter even more to the University is a little closer to home.
In Stanwood, Michigan, a small town near the center of the state, Nestle planned to open a Perrier water bottling plant in 2001. Since then, the plant has been the center of a controversy regarding the environmental damage caused by the plant’s abuse of a natural aquifer. Other than providing some employment — which is admittedly vital in this state — the plant hurts Michigan by pumping 500,000 gallons of water each day and destroying established ecosystems.
To be sure, the University’s financial officers probably invested in Nestle for a variety of good reasons. Nestle is, after all, among the world’s biggest foods companies. And especially now, as this state struggles to keep (let alone create) jobs, Nestle may appear to be a responsible choice on account of its continued employment of Michiganders.
But if the University could perhaps turn a blind eye to Nestle’s other unethical actions, it simply cannot ignore the company’s deleterious effects on Michigan. Rather than divest, the University ought to channel its recent history with Coca-Cola and petition Nestle to make positive changes to the way its Stanwood plant affects the environment.
Despite what some may still think, the University is not an insatiable Gordon Gekko, intent solely on making as much money as possible. Indeed, it has shown remarkable ethical care in recent history. But the University cannot become complacent just because it has done the right thing in the past. It is the University’s responsibility to make every possible change for the better. And while change is sometimes challenging, the University can take a small baby step in favor of social justice by reconsidering its investment in Nestle.
Matthew Green can be reached at greenmat@umich.edu.