Divestment proposal takes stand against companies that fund genocide in Darfur

By Zac Farber

More than 10,000 Sudanese refugees fled to Chad this week, after another spate of violence in the Darfur region, where more than 200,000 people have been killed since 2003. A few international corporations have helped finance the industrial violence that has become a hallmark of the Darfur conflict. Sandy Robson ’08 is trying to make Macalester a part of the growing movement that opposes this corporate-sponsored genocide.Robson is working to persuade the Macalester administration to use a method of protest, known as divestment, to make a political statement against companies whose business practices, she says, enable the actions of the Sudanese government.

The Legislative Body of Macalester College Student Government will vote Tuesday on a proposal co-authored by Robson, which would require divestment from offending companies that the college has direct holdings in, following a window of three months for the company to change its policy.

Craig Aase, Macalester’s chief investment officer, said that the college presently doesn’t invest in any such companies. Robson’s proposal would apply to potential future investments.

For mutual funds, hedge funds and other types of external financial management funds, in which the majority of Macalester’s endowment is invested, Robson’s proposal would require the college to “submit letters” to the fund managers “requesting that they consider removing scrutinized companies from their holdings,” but there would be no requirement for the funds to change.

Macalester currently has only one stock, worth $75,000, invested in one of these funds, Aase said.

The Sudan Divestment Task Force, a non-profit organization, releases a list of what its website calls, “the most egregiously offending companies in Sudan” and keeps track of which universities, states, cities, countries, and other organizations refuse to invest in the “offending companies.” Almost 60 universities-including Harvard, Yale and the University of Minnesota-have stopped investing in those companies, according to the website, and about 50 more universities are considering adopting divestment proposals.

If enough schools adopt similar proposals, Robson said, the combined economic power could make a real impact.

“If you have a big endowment, you can have a big voice,” Robson said, adding, “if you have 100 schools, that’s like $100 billion.”

But the amount of money Macalester has invested in companies on the task force’s list is relatively small.

“In a $675 million endowment,” Aase said, “we only found one stock with one manager worth $75,000 on a $35 million account.”

“I don’t think monetarily we would make a huge difference,” Dean of Students Laurie Hamre said.

The fund managers with whom Macalester invests its endowments have multiple clients signed up for the same fund.

This makes it difficult, Aase said, to dictate preferred stock options to a fund manager.

“We can’t tell them not to invest in some companies,” he said.

It is possible, Aase said, “to recommend that we express to our managers an institutional desire that they not invest in blah, blah, blah-fill in the blanks.”

It is easier, he said, for large institutions that manage their money internally to invest in a socially responsible way than it is for small institutions such as Macalester that rely on external money managers.

But Aase said, “We’re doing a lot more than the Harvards and Yales of the world based on access [to higher education].”

Students and administrators who support the plan say that the attention the plan would bring to the issue trumps the monetary deterrent the plan would have on offending companies.

“This would be setting a precedent,” Robson said. “It’s already been shown that it’s not really a huge risk for the endowment.”

President Brian Rosenberg, who will make the final decision of whether the college adopts the proposal, said that $75,000 is not a large sum to reinvest.

“Symbolically it’s significant,” he said, referring to the proposal.

The Social Responsibility Committee, a committee that reports to Rosenberg, will decide whether to recommend the divestment proposal for approval after the Legislative Body votes on it. Hamre, a non-voting member of the SRC, said that the committee will use the legislative body’s vote on the proposal as a referendum of its popularity.

“We haven’t heard from a groundwork of students,” she said. “We don’t know how broadly the student body or other members of the community really feel about it.”

She reiterated that the SRC’s decision is not the final word.

“The SRC doesn’t make any decisions for the college,” she said. “It makes recommendations to the President.”

Although Rosenberg has not seen a final copy of the proposal, he said he gives it his initial support.

“Unless there’s a cost I’m not aware of,” he said, “I think it’s something we should do.”

“I’ve done some looking at what other colleges and universities have done in targeted divestment and it seems as if it is not that difficult to implement.”

MCSG President Franz Meyer ’08 is also a vocal supporter.

“I think the policy is very well-researched and important,” he said. “It’s something Mac can do to help promote social justice in the world.”

Aase, the chief financial officer, is more ambivalent.

“There is a theoretical downside,” he said, “that as soon as you constrain the list of options for investing, you’ll likely reduce return.”

But Aase added, “I also read the literature that says good corporate citizenship leads to good returns.”

Financial Affairs Commission member Frederik Flagstad ’08 suggested that socially responsible investing is a slippery slope, which can lead its practitioners off the precipice toward poor financial decisions.

“I think it’s silly,” he said. “The question is, ‘Where do we stop?’ If we stop in Sudan, do we stop with companies that drive out small businesses and communities in the U.S.?”

Flagstad said having the biggest endowment is the number one priority.

“The assumption at the end of the day,” he said, “is that every company will have some good and some bad qualities. Our concern is, ‘Will the company be able to sustain our education?’