U of T now has close to $5.7 billion in investments. That’s a significant sum of money when compared to other Canadian universities. Income from investments represents almost eight per cent of the school’s annual budget, which means that it is being re-invested into the school. These investments strongly impact our university experience. But is this money being invested responsibly? Ethically?
Finance-savvy students are quick to point out that U of T investing in controversial companies like Lockheed Martin or Shell doesn’t really profit them. We are not financing these companies or supporting them with our money because, more likely than not, we did not purchase our shares directly from the corporations but rather from other shareholders. This point is accurate, if not entirely relevant. We aren’t benefiting these companies. Rather, these companies are benefiting us, which is all the more reason to ensure that they are acting responsibly.
Responsible Investment (RI) is more about financial sustainability than it is about ulterior moral motivations. RI is about incorporating environmental, social and governance criteria into market assessments. While these factors are often undervalued, it seems to be an elementary deduction to claim that in the long term, the environmental sustainability of a host region will affect a multinational corporation’s business outcomes.
Same goes for political instability and gross violations of human rights. Consider the case of Talisman Energy, which recently saw a massive drop in share value despite quadrupling production. As a direct result of their operations in Sudan and the Sudanese government’s unethical actions, most Western countries began divesting in the country, and Talisman suffered. Another example, Total S.A., is frequently targeted with lawsuits for violating labour rights, and has drawn much negative publicity. Perception is everything in the stock market.
RI is quite different from Ethical Investment, which is an initiative more concerned with divestment from immoral corporations. RI, on the other hand uses reward-based guidelines to actively participate in appropriate shareholder coalitions, such as the Canadian Coalition for Good Governance (CCGG) or the Carbon Disclosure Project. Through these organizations, RI focuses on investing in companies that have strong social, environmental, and political indicators of sustainable policies and profits.
Supporting something like RI has proven to be financially sound. The Domini Social Index, an RI investment index, has out-performed the mainstream S&P 500 for the last seventeen years. The Canadian Jantzi Social Index has out-performed or performed at par with the Toronto Stock Exchange since its inception in 2000. Prominent universities such as Harvard, Yale and Brown have all successfully pursued RI.
Despite a sense of morality not being the prime motivation behind RI, ultimately we relate to investment on a moral level. We must ask if we can morally reconcile ourselves to benefiting from war profiteers, environmental degraders, and human-rights violators through our academic institution. We at Investing in Integrity have decided that we cannot. We do not advocate undercutting investment profits, but following the precedence set by companies and institutions that have correctly identified RI as win/win.
Were I to invest my personal funds, I would not consider investing in Halliburton even though they are going to be quite profitable for winning most of the uncontested Iraq reconstruction contracts. I have the liberty of choosing a company that I feel will not only make me financially comfortable (although really, I’m aiming for rich), but one that also aligns with my moral and ethical stance on the world. In the free market, that’s my prerogative and the perfect example of that capitalist buzzword: “choice”.
But where is the choice for students whose money is being invested by the university? Nowhere does the university even acknowledge that staff, faculty, students or alumni have legitimate concerns about the state of U of T’s investments, much less does U of T provide a forum for discussing such matters.
Investing in Integrity is working to give everyone that voice and that choice. This institution shouldn’t just be investing in companies that are transparent and accountable, but should also be conducting its own investments in a transparent and accountable fashion. Responsible Investing is a concept sorely neglected by the university, and that is something we hope to correct in the near future.
