University's investment responsibility discussed at town hall meeting
When it comes to understanding how the Stanford Management Company invests the university's $12 billion endowment, it helps to assume that the university owns or has owned stock in just about every publicly traded company, said finance Professor George Parker, chairman of the Advisory Panel on Investment Responsibility, at a town hall meeting April 6.
With that assumption, you eliminate the need for the university to disclose its investments, Parker said, and you should instead focus on calling the university's attention to companies that engage in questionable practices. It wasn't the answer that many students who attended the meeting were expecting to hear, but it did open the door to a productive, and sometimes emotional, dialogue on the university's obligation to manage the endowment responsibly.
The town hall meeting was convened to provide a forum for students, staff, faculty and alumni to hear about the university's investment policies and to voice their opposition to having the endowment invested in companies that may financially support oppressive or violent regimes or engage in questionable business practices.
The 12-member panel, which includes students, staff, faculty and alumni, is an advisory body to the Board of Trustees, which has ultimate fiduciary responsibility for the endowment. The endowment in managed on a daily basis by the Stanford Management Company. The panel was founded when the trustees adopted a "statement on investment responsibility" in 1971 to establish a guideline, structure and process for addressing what would later be called allegations of "substantial social injury" by companies in which the university invests.
Approximately two dozen students, and at least one faculty member, attended the meeting, and although the numbers suggested that the issue of investment responsibility is not as topical as it was back in 1987 when the university divested from companies that supported the South African government to protest apartheid, the students argued passionately for responsible investments.
"Has the [panel] considered genocide in Sudan and Darfur?" asked Seth Silverman, representing the group Students Taking Action Now: Darfur (STAND). "I can give you a list of five companies that have major interests in Sudan. I think that there is something to be said about having a clear conscience and to give a certain amount of assurance … that Stanford's dollars are not going toward funding genocide."
Silverman, the author of a letter to the panel that mentioned the companies that are doing business in Sudan, was praised by panel members for his approach in calling attention to companies that were of concern to him. Complaints about companies should include as many details as possible, because panel members typically require high thresholds of proof about alleged wrongdoings before recommending that the trustees take action against any particular business, said Parker, a faculty member of the Graduate School of Business.
Parker said he was told by the head of the Stanford Management Company that the university owns $1 million worth of stock in one particular Chinese company, PetroChina, that was singled out by student groups for helping the Sudanese government produce oil within the country. "I can tell you we do own it and maybe we shouldn't," Parker said.
Parker and several of the panelists indicated a willingness to consider the PetroChina matter in the coming weeks. The Harvard Corporation had earlier in the week announced its decision to divest from PetroChina over similar concerns.
"This is the forum and there's a certain dependence to have students hold us accountable," said panel member Debra Meyerson, associate professor of education. "I think what we need is to explain what do [complainants] do, how you hold us accountable."
On the whole, both the students and panelists highlighted several areas of communication that need to be worked on. Panelists agreed that the group needs a dedicated website that communicates its mission and provides detailed instructions for anyone who wants to lodge a complaint against a company, including guidelines on what a complaint should include.
Panelist Rick Banks, a professor at the Law School, said the panel must rely on community members to file detailed complaints that allege wrongdoing because most people on the panel don't have the time or resources to investigate specific companies.
"The real question is how you develop information about which companies are engaged in questionable acts," Banks said. "When you put a lot of cases together, the policies will follow."