University investment policies don’t require social responsibility

Despite a growing national trend toward socially conscious investing, University officials say the school has no plans to change its investment policies to mandate such guidelines.

Socially responsible investing, or SRI guidelines, often prohibit investing in companies that fund war or genocide, mistreat workers or break child labor laws, produce “sin” products, or contribute to activities that degrade the environment.

Don Lindsey, the University’s chief investment officer, said GW currently has no socially conscious clause in the school’s investment policies and he is not aware of any plans to change the policies in the future.

“We haven’t looked at any of those issues,” Lindsey said.

The current policy, drafted by the Board of Trustees, does not prohibit the University from investing in companies that do not follow socially conscious guidelines.

The list of colleges and universities adopting socially conscious policies has grown in recent years, and many universities like Harvard, Yale, Columbia, and Stanford have full-time advisory councils to advise the school’s investment policies.

In 2007, a popular SRI platform was removing investments in companies or organizations that fund violence in Darfur, a region in which genocide has been raging since 2003.

More than 60 universities adopted such policies, with many claiming student pressure as a motivating factor, according to information from the Sudan Divestment Task Force, an organization whose mission is to encourage the reduction in investments in the country.

GW was not among them. In 2007, GW STAND pressured the University but was told by former President Stephen Joel Trachtenberg that GW would not reduce its investment. Instead, GW funded a Baana scholarship for a Sudanese student to study at GW.

As of Oct. 29, GW’s endowment is valued at $1.054 billion, and while Lindsey said he did not know the exact companies in which the University invests, it was possible that some of those companies are on the Sudan Company Report blacklist or are not following standard SRI policies.

“We may, it’s possible,” Lindsey said, adding that it might not be in the “best interest of the University” to invest solely in companies that follow socially conscious investing.

“This is my personal opinion, but my personal preference is to maximize rate of return,” he said. “Stocks change all the time, it could be possible, but we don’t go through our portfolios line by line to check.”

Lindsey said new investment policies traditionally include some form of oversight, something he said would be hard for a university like GW that has external money managers oversee roughly 50 percent of its investments.

The Investment Office outsources the actual investing process to around 45 money management companies. These firms create portfolios that the University can opt into, but the school has no control over the selling or buying of stocks in those portfolios, nor does Lindsey think it would be helpful to look at individual stocks.

“We always have the option to look at the portfolio,” he said. “But we don’t pay a lot of attention to individual stocks.”

Lindsey said the University bases the decision to invest on “financial metrics,” meaning profit is his office’s reigning factor when picking a firm.

Earlier in the decade, the Investment Office surveyed its money managers and found 50 percent of the managers do follow SRI guidelines. This survey was for informational purposes, Lindsey said, and GW did not stop investments in those companies that said they do not consider social consciousness in their investments.

“We do not engage any managers to make them SRI managers,” Lindsey said last March.

Executive Vice President and Treasurer Lou Katz said consumers have been putting pressure on companies to act in a socially conscious manner.

“At the end of the day, whether your investments do well or not is really [based on] how much demand there is for whatever products they have,” Katz said. “People are looking if these are good companies [or if they] are they not good companies. All of those kinds of things have weighed into this much more than I’ve ever seen in my professional career.”

Emily Cahn contributed to this report.

The Hatchet has disabled comments on our website. Learn more.