Stanford Board of Trustees acts on investment responsibility matters

During its meetings this week, the Stanford Board of Trustees took two separate actions related to the university's investment responsibility procedures.

The board accepted an internal fact-finding review that found that the chair of the Advisory Panel on Investment Responsibility and Licensing (APIRL), a panel of Stanford community members that provides input to the trustees on investment responsibility issues, had no conflict of interest when the panel considered a request for divestment from certain companies doing business in Israel earlier this year.

The fact-finding, conducted by Catherine Glaze, associate dean for student affairs at Stanford Law School, found that Susan Weinstein did not have a conflict of interest as APIRL chair. The independent review was requested by the Trustees' Special Committee on Investment Responsibility (SCIR) when, after the SCIR declined to divest, some students advocating Israel divestment raised concerns about Weinstein's service as a board member of Hillel at Stanford for part of the time she chaired the APIRL.

The fact-finding review found Weinstein acted appropriately at all times and guided a thorough divestment review process, and that the process under her direction followed the standard procedures in reviewing the request from Students for Justice in Palestine that the university divest from companies that do business in Israel. Weinstein did not express any public view about divestment when she was on the Hillel board, and she did not participate in any divestment-related discussions at Hillel. 

To avoid even the appearance of a conflict, Weinstein resigned from the Hillel at Stanford board in January 2015, as soon she learned Hillel might be involved in activities related to divestment. In April, the Board of Trustees announced that it would not be taking action on the request for divestment.

"We appreciate the professional review conducted by Cathy Glaze in response to the concerns raised by students, and we are pleased that it has validated the fair and thorough process led by Susan Weinstein as chair of the APIRL," said Deborah DeCotis, chair of the Trustees' Special Committee on Investment Responsibility. "It is a measure of Weinstein's integrity that she chose to resign from Hillel, the same day she learned there might be some Hillel engagement with Jewish students around divestment issues, to avoid any possible issues about conflict of interest."

Also at its meeting this week, the Board of Trustees approved an updated Statement on Investment Responsibility. The statement is the board's expression of its approach to the responsible investment of the university's endowment. The statement was first adopted more than 40 years ago, in 1971, and has been amended many times since.

Steven A. Denning, chair of the Board of Trustees, said the board believed the statement needed simplification and clarification. It had become cluttered with procedural details added at various times over the years, he said, instead of serving as an overarching statement of principles.

In addition, the statement must provide clarity about the board's thinking as investment responsibility proposals coming to the university continue to evolve in nature and increase in complexity, he said.

"The statement continues to emphasize the importance of responsible investment practices and the importance of community input regarding investment responsibility issues at Stanford," Denning said. "This update separates core principles from operational details that are best coordinated by the administration. It also clarifies some of the principles important to the trustees so that everyone with an interest in these issues may have a clearer sense of the board's approach to investment responsibility."

While the updated statement makes clear that the board may "consider issues of social injury when managing the endowment," it also notes that the primary fiduciary duty of the trustees continues to be maximizing the financial return on endowment assets to support the teaching and research mission of the university.

Under the updated statement, the trustees delegate to the Office of the President responsibility for establishing a new university office to advise the trustees on investment responsibility issues. The office will consider requests from the university community regarding specific investment responsibility concerns. In doing so, it will solicit input from an advisory committee that includes members of the university community.

Placing operational responsibility for these activities under the Office of the President will allow the university to address investment responsibility issues in a responsive manner throughout the year, Denning said.

Details of the new process, including establishment of the advisory panel to succeed the current APIRL, will be developed by the Office of the President over the summer and announced to the campus community in the fall.