As Bowdoin boasts high returns on its half-billion-dollar endowment—which provides nearly a quarter of its budget annually—a small number of students have been meeting informally with President Barry Mills over the past year about concerns over whether the College's money is invested in socially responsible companies.
Among the students' concerns have been environmental degradation, child labor, human rights violations, and genocide—particularly in the Darfur region of Sudan.
The conflict in Sudan has led several colleges and universities in recent years to take up the issue of investment in companies that deal with the Sudanese government. A government-supported militia is widely considered responsible for the deaths of thousands in the western Sudanese region of Darfur that the Bush administration and the U.S. Congress have termed genocide.
In April of last year, the governing body of Harvard University decided to divest from PetroChina, a Chinese company known for its partnership with the Sudanese government in oil production. Dartmouth College, Stanford University, and most recently Amherst College have also addressed the issue of Sudanese investment.
Ben Kreider '05, one of the students who met with Mills, said the College needs to be more active in avoiding investment in companies that he believes are not "socially responsible."
"If the college is always going to talk about the common good, then it should practice it. Right now there is no way of knowing whether we're not funding companies that do any number of horrible things, and that's something that I think really needs to be addressed," Kreider said.
Vice President of Investments Paula Volent expressed confidence in the ethics of Bowdoin's investments.
"I can't even think about one investment that I'd worry about in terms of social issues," she said.
In an interview with the Orient, Mills said he was receptive to the thoughts of the students, yet expressed concern about the difficulty of defining the term "socially responsible."
"What is socially responsible for some is not socially responsible for others," Mills said. "Although there are some examples like Darfur where people would differ less."
Mills underscored the importance of the endowment in supporting the mission of the College and pointed to financial aid as one of the most important programs funded by the endowment.
"It is socially responsible to provide financial aid to as many students as we can," Mills said.
Kreider called on the administration to make its endowment holdings more public.
"Mills never really gave me what I was looking for in terms of any sort of specifics on where our money actually goes. I understand for reasons of competitiveness that there has to be some sort of secrecy, but I think there is too much," he said.
According to Volent, the College maintains industry-standard secrecy in its investments in part because of confidentiality agreements with some of its fund managers. She also said that releasing such information could decrease the endowment's growth.
Bowdoin’s endowment holdings
A report released in December by the Allard K. Lowenstein International Human Rights Project at Yale Law School identified a list of companies that were definitely or potentially doing business in Sudan.
The Orient asked Volent whether any of Bowdoin's funds held equity in the companies listed in the report. Of the funds that make their holdings available to the College, none were invested in companies on the list, Volent said.
However, the College is not able to access the specific holdings of some of its funds. For these funds, Volent said, Bowdoin is unable to state whether they contain companies on the Lowenstein list.
She said that since some of the Lowenstein companies are listed on popular indices such as the S&P 500 and the MSCI EAFE index, many investors likely have exposure to the companies through index fund holdings of investments like retirement funds.
Volent questioned the logic of assuming all companies that do business in Sudan are worth divesting from, noting that the presence of some companies may be beneficial for the Sudanese people and that the exit of some companies may make the situation worse.
Both Mills and Volent said that from their perspectives, the key to investing responsibly was choosing ethical fund managers with whom to invest.
"Our job is selecting reputable, honest, and trustworthy folks to preserve and maintain our endowment," said Mills.
"We do a very, very rigorous due diligence process. The due diligence process will be meeting with a manager, their team, their back office, and all of the people involved in the fund multiple times," Volent said. "As far as social responsibility, we ask questions concerned with ethics. If there are any ethical questions, it just doesn't come up to the investment committee as a recommendation because we don't want the risk."
Recent action by Amherst College
The Board of Trustees of Amherst College unanimously voted last month to bar direct investment in 19 companies it determined to have involvement with the government of Sudan.
While Amherst did not currently have any money directly invested in these companies to divest, it did say that some of the funds it invested in had holdings that included some of the banned companies. In response to these holdings, the board resolved to make its position on Sudanese investment clear to its fund managers.
"We want to be sure that our investment managers understand our stance on this important issue as they consider their own investment strategies," said Amherst trustee Bill Ford, as quoted by the Amherst's Office of Public Affairs.
The board's resolution did note, however, that it believed divestment as a remedy should only be used in extreme cases.
"A divestment action should be considered rarely and only in the face of human atrocities that are wholly inconsistent with the moral and ethical values of Amherst College," read the board's resolution.
In response to the Amherst action, Mills expressed skepticism about its potential to make a real impact.
"It's a wonderfully symbolic statement," he said. "Whether it is effective in any respect remains to be seen."
Asked if he would support a similar action at Bowdoin, Mill responded, "I think it would only be worth it if it had a material effect on the companies involved."
Mills warned that putting restrictions on investments might make Bowdoin a less attractive investor to fund managers.
He did not, however, rule out action relating to Sudan.
"There may be more news to follow, there may be not," he said.
Bowdoin’s 1980s divestment from South Africa
In 1978, President William Enteman recommended the creation of a special advisory committee to look into Bowdoin's investments in South Africa in light of apartheid, the system of government-sponsored racial segregation that existed there until the early 1990s.
The ad hoc committee recommended Bowdoin divest from companies substantially involved in South Africa. It also suggested the formation of a permanent subcommittee on the Board of Trustees to look into matters of ethical investing.
Associate Professor of History and Africana Studies Randy Stakeman served on the initial advisory committee.
"We started out looking at South Africa and realized that it was just the tip of the iceberg," Stakeman said. "I certainly think that the committee was prescient that [South Africa] wasn't going to be the last of these issues."
The advisory committee also recommended that Bowdoin give scholarship money to support South African students.
"What our committee learned was that divestment isn't the last step, it's the first step," Stakeman said.
As a result of the advisory committee's suggestions, and significant student and faculty activism, the trustees created in 1981 a Subcommittee on Social Responsibility, which reported to the board's Committee on Investments. The College ultimately did divest from certain funds that had holdings in companies with substantial involvement in South Africa.
Calls for action
Professor of Religion and Asian Studies John C. Holt served on the subcommittee during the 1994-1995 academic year, the committee's last year of existence.
Holt remembered that the subcommittee was not very active at that time since the South African issue seemed to be resolved.
"Maybe it's time to reinvent this committee," Holt said.
Stakeman agreed, citing a need for more discussion on the issue of investment in Sudan.
"I think there is a big lack of information. Having a committee to sort through it will bring about the right decision," Stakeman said.
Currently, the mandate of the Board of Trustees' Investment Committee, as defined by the board's by-laws, does not specifically call for the committee to consider issues of social responsibility.
When asked if he saw a need for a committee on ethical investing, Mills encouraged dialogue but stopped short of endorsing such a move.
"I'm not a great one for committees," he said. "I'm one for discussion."
Volent urged students to seriously study issues of corporate governance and investing.
"I think its always good to have a dialogue and to realize the implications of the investment or the company that you are supporting," Volent said.
Sophomore Sam Minot, who also met with Mills, noted the importance of student involvement.
"Unless there was a lot of interest from the student body, there was not much action we could take," he said.
Minot said his next goal was to try to raise student awareness about investment issues.