At many colleges, victories have been slow to accumulate for campus activists who have pressured their institutions to ban certain investments from their endowments. There are hundreds of active campaigns that seek divestment from fossil-fuel companies, yet a much smaller number of colleges have actually pledged to follow through on those demands.
But student activists say they scored an important victory last week, when Columbia University decided to divest from for-profit prison companies. Columbia’s decision demonstrates how the campus-divestment movement has grown to encompass more causes than just fossil fuels, including such issues as mass incarceration, guns, and international human rights.
Even if a university hasn’t invested much money in a particular industry or company, activists say, investment choices are an effective way for an institution to take a moral stand. Students contend that their campaigns attract vast public attention, putting pressure on colleges to stop supporting entities that students find ethically questionable. Higher-education leaders, meanwhile, must weigh those demands against what they consider their duty to handle money responsibly and maintain their colleges’ financial health.
“As a strategy, there is precedent to say that economic activism does work,” said Lauren E. Ballester, a recent graduate of the University of Pennsylvania who worked on a multifaceted campaign there aimed at curbing investments in fossil fuels, private prisons, and companies that the campaign’s organizers believe are involved in violations of human rights. She cited the successes of a campaign that’s considered the foundation of the modern divestment movement, in the 1980s — the movement against apartheid in South Africa.
Still, several factors hinder the success of such campaigns. College trustees often reject calls for divestment, arguing that endowments aren’t supposed to be vehicles of social justice or politics and casting doubt on socially responsible investing, viewing it as an impediment to high returns.
Furthermore, it’s difficult to pinpoint exactly how much a college invests in a company or industry, and colleges’ criteria for acting on divestment demands tend to be stringent. Penn has used “moral evil” as its standard. At Columbia, students had to prove that private prison investments were “morally reprehensible” and that support for divestment was widespread on the campus.
“The question is, at what point does a category of investment become so repugnant that one can’t touch it in any way?” said William F. Jarvis, managing director of the Commonfund Institute, which, along with the National Association of College and University Business Officers, conducts an annual study of college endowments. It’s not clear whether fossil fuels and other divestment targets fall into that category right now, he said.
Divestment as Protest
Interest in divestment as a form of student protest has expanded over the past three years, said Marcie A. Smith, executive director of the Responsible Endowments Coalition, which supports divestment campaigns on campuses. The efforts stretch across multiple social movements, she said.
At least five University of California student senates have voted in favor of private-prison divestment, said Yoel Haile, a graduate student at the Berkeley campus who’s part of the UC prison-divestment campaign. Similar campaigns are underway at New York University and Brown University.
Occidental College responded to the 2012 shootings at Sandy Hook Elementary School, in Connecticut, with a pledge last year never to invest in companies that sell military-style assault weapons to the public. The University of California system divested from firearms in 2013, said a spokeswoman, Dianne Klein, though students are now pushing the system to formally ban future investments in gun companies.
Activists at Wesleyan University staged a sit-in at President Michael S. Roth’s office in April, demanding that the Connecticut institution divest from fossil-fuel companies as well as those profiting from private prisons and the Israeli occupation of Palestinian territories.
Divestment campaigns are a way of productively directing students’ protests toward a clear goal, said Rahim A. Kurwa, a graduate student at the University of California at Los Angeles who has been active in divestment campaigns.
Ms. Smith, of the Responsible Endowments Coalition, agreed. “There’s a huge opportunity for institutions of higher learning to help shift the moral compass of society on core questions,” she said.
Not all college and university leaders share that view of their endowments.
At Wesleyan, Mr. Roth said he agreed with activists that the university shouldn’t be profiting from private prison companies and wrote in a blog post that Wesleyan did not hold any such investments. But Boston University’s trustees voted against divesting from gun manufacturers in February. American University, the University of Colorado, and the University of California system are among several institutions that have rejected fossil-fuel divestment in the past year.
Some administrators and board members who don’t support divestment campaigns believe their opposition can outlast the protests, given students’ short-lived presence on campuses, Mr. Jarvis, of the Commonfund Institute, said.
Many campaigns are also weakened by their lack of knowledge of how much an institution invests in a particular way. Columbia students, for instance, said they had managed to view about 10 percent of the university’s portfolio. They said they had determined that the university invested a total of $10 million in two private prison corporations, the Corrections Corporation of America and G4S, a multinational firm with headquarters in Britain. Jessica Reyes, a Columbia spokeswoman, couldn’t confirm the students’ numbers, saying that the university doesn’t publicly disclose investment holdings.
Several students noted that their efforts were not necessarily about money. “Ten million dollars isn’t going to make the [private prison companies] fall,” said Asha R. Ransby-Sporn, a Columbia student and an organizer with Columbia Prison Divest. “The goal is really that we can make something like private prisons a socially toxic investment.”
Endowments and Priorities
Student activists emphasized that their divestment campaigns on fossil fuels, prisons, guns, and other social issues will continue to expand nationwide. Still, as advocates’ voices swell, colleges and universities are grappling with a fundamental question: Are higher-education institutions supposed to be moral actors when it comes to their endowments?
“Absolutely not,” said Michael T. Jacobs, a professor of the practice of finance at the University of North Carolina at Chapel Hill.
If endowment committees and boards appear receptive to divestment on one issue, it opens “a complete Pandora’s box,” bringing “an infinite number of social causes” to the table, said Mr. Jacobs, a former director of corporate finance for the U.S. Treasury Department.
Divestment, he said, “undermines the ability of the endowment to do its job,” which is making money for the institution.
David K. Backus, an economics professor at NYU, was part of a working group that earlier this year recommended that NYU not divest from fossil-fuel companies. In an email, he said he’d prefer that higher-education institutions not choose sides through divestment because it “discourages those with different points of view.”
In May the Commonfund Institute released a survey that found that about one-fifth of colleges and universities had policies for socially responsible investing, in which investments are kept out of certain stocks based on specific ethical guidelines. On the other hand, nearly half of institutions — identified only by region, size, and type — said they didn’t plan to make any further changes in their endowments based on socially responsible investing practices, and about 6 percent had already discussed and rejected those practices.
Given the complex nature of a portfolio, it can be difficult even for people who oversee endowments to know exactly what an institution invests in, Mr. Jacobs said.
Peter Dreier, a political-science professor at Occidental, said that argument was “bogus.” Also, divestment is not the only goal, he said; institutions should reinvest in causes that promote societal good, locally and globally.
So-called impact investing, which is focused on community benefit and doesn’t necessarily offer high returns, is not a strategy typically employed by higher-education institutions, Mr. Jarvis said.
But there is institutional interest, he noted, in socially responsible investing, which might offer hope to campus activists. “This is not a train that’s standing on the track,” he said. “It’s moving relatively slowly at this stage, but it’s not stationary.”
