On Tuesday, pro-Palestinian protesters said that California State University at Sacramento had taken a significant step: The institution had “officially divested.”
According to an agreement reached with student protesters, Sacramento State has adopted a policy directing its five auxiliary organizations, including its philanthropic and fund-raising foundation, to ensure they do not have direct investments in “corporations and funds that profit from genocide, ethnic cleansing, and activities that violate fundamental human rights.”
But at least one expert is skeptical that protesters are getting what they’re asking for. Declaring that a university will not directly hold investments in companies profiting off of genocide is “an easy thing to say,” said Kevin Maloney, chair of the finance department at Bryant University, in Rhode Island. Sacramento State said this week that it currently held no direct investments in those areas.
“It’s a nice gesture, but it doesn’t seem to be all that impactful,” said Maloney, who worked in investment management and hedge funds for more than two decades. “It doesn’t really constrain them in any way.”
Still, the outcome of the Sacramento State protest stands out. Negotiations between student protesters — who, with their encampments spreading across the world, are calling on colleges to pull financial holdings from companies with ties to Israel and its military — have stalled at several colleges and failed altogether at others, resulting in police sweeps and mass arrests.
Ten or so colleges have struck deals with pro-Palestinian protesters. Brown University in late April agreed to vote on divestment from companies affiliated with Israel. Evergreen State College, in Olympia, Wash., established several task forces, one of which will propose socially responsible revisions to investment policies.
Sacramento State’s current president, Luke Wood, is the youngest person to lead the university and the youngest permanent president of a public four-year college nationally, at age 41, according to Sacramento State’s website. Wood was also the first-ever Black distinguished professor at San Diego State University, where he previously taught and served as an administrator.
“CSU Sacramento opposes and condemns all acts of genocide, ethnic cleansing, and other activities that violate fundamental human rights,” the university wrote in a presidential memoranda and a policy statement that went into effect Tuesday. “CSU Sacramento will not engage in any activity or enter into any agreement that conflicts with these values.”
Colleges’ investments are largely held indirectly, according to Maloney, and decisions are made through third-party managers. If a college wants to withdraw holdings in Israeli companies, “they have to either convince the manager to never buy them, or they have to find another manager who is willing to accept that constraint,” he said.
But most investment managers are not interested in accepting restrictions on what kinds of companies they can invest in, according to Maloney. From a manager’s perspective, he said, it’s a slippery slope.
“It’s a constantly shifting set of things to be aggrieved about,” Maloney said. It’s also likely that universities “don’t want to set a precedent, because then they’re open to lots of other things,” he said. “Those can become increasingly impactful to their ultimate mission, which is to generate returns that maintain the purchasing power of the endowment over time and produce income to support the causes for which those dollars were donated to the university.”
It is also unclear how Sacramento State will determine what constitutes a corporation that “profit[s] from genocide, ethnic cleansing, and activities that violate fundamental human rights.” The university did not respond to a request for comment this week.
“They immediately said, ‘We have none [of those direct investments] today.’ It was kind of an easy thing to say,” Maloney said. “I’ve never found a company out there that says, ‘Our business is to lend money to people who engage in this kind of activity.’”
But efforts to open doors to conversation about divestment are laudable, Maloney said. Several colleges where administrations have made concessions to protesters’ demands have shifted from “closing the doors and saying, ‘We refuse to engage with people’ to, ‘Let’s have a dialogue so that you understand the complexity of the issues,’” he said.
“This is a learning opportunity for both sides,” he continued. “I think most of the protesters have no idea what endowments are, how they’re invested, what constraints they face, what consequences there might be from imposing restrictions, and engaging in that conversation doesn’t hurt.”
