University News
University Announces Divestiture Policy
From the Archives
By Katherine Hinds
October 29th, 2024
Brown has taken a significant step in acting against apartheid in South Africa. The Corporation’s Advisory and Executive Committee votes at its April meeting to oppose apartheid through the University’s investment policy.
The vote was in agreement with a resolution that declared, among other things, that the University would not “invest in American companies with one or more subsidiaries in South Africa if such subsidiaries do not operate in substantial compliance with the Sullivan Principles, as they exist at this time.” The Sullivan Principles, authored by civil-rights activist the Rev. Leon Sullivan, require companies to hire and pay Black workers equally, to provide training and promotion opportunities for them, and to contribute to education, health, and other community development projects.
In addition, the University will not invest in companies that “through the supply of goods or services are directly involved in the maintenance or enforcement of apartheid.” According to Robert A. Reichley, vice president for University relations, interpreting words such as “directly involved” will be the responsibility of the University treasurer, who will implement the policies mentioned in the resolution.
Reflections in the mirror glass of the addition to the Bio-Med Center (1984).PHOTO: JOHN FORASTÉ / BROWN ARCHIVES
Reichley indicated that the University has divested itself in the past of certain holdings with ties to South Africa. “There are stocks no longer in the portfolio that were before.” And why South Africa, when there are other countries whose governments are not examples of rectitude? “The issue is not one of good government versus bad government,” explains Reichley. “The issue is apartheid. The trustees felt that apartheid was not consistent with the goals and ideals of Brown University.
“The issue has come before the Corporation several times in the past ten years,” says Reichley, “but this is the most substantial position Brown has yet taken on the issue. The feeling on the part of the trustees was that the passage of a decade has allowed ample time for companies operating in South Africa to at least substantially comply with the Sullivan Principles.”
The resolution also stated that the University would divest its portfolio of investments that were not in compliance with the Sullivan Principles as soon as possible without suffering undue financial loss. According to Reichley, an estimated $6-$10 million may be affected out of a total endowment portfolio of approximately $200 million. “We won’t divest at a loss,” says Reichley. “We will do so as quickly as possible without eroding University endowment. Two years seems like a good amount of time.”
The University will also take a new tack, by making its decision to divest a certain stock known to the company before declaring the disinvestment publicly. Further, the University will consider the divestment policy when accepting gifts.
The report by the Committee on Proxy Issues noted, “While we believe that for numerous reasons the Corporation should refrain from becoming involved in political issues, particularly ones far from home, we regard apartheid as so repugnant to various of the principles for which the University stands as to warrant an exception in its case.”
Reichley said that kudos should be given to the students who originated the proposal last fall. Kent Greenfield ’84, Mark Koide ’84, and Roland Pearson ’84 said that they “consciously decided to utilize the established lines of communication and discourse between students and the administration instead of the typically student-oriented, more radical forms of protest such as rallies, sit-ins, and other public acts of disruption.” The seniors formulated a referendum that was submitted to the student body, which approved it by a 7:2 margin. The resolution was then approved by the Undergraduate Council of Students before it was presented to the Corporation’s Advisory Committee on Corporate Responsibility.
According to the Boston Globe, “a number of other universities have adopted similar resolutions, but Brown is believed to have taken the strongest stand so far among the Ivy League colleges.”
Yale University, according to the associate director of public information, Steve Kezerian, adopted its policy on divestiture in 1978. “Yale will vote as a stockholder to ask companies to abide by the Sullivan Principles,” Kezerian says. The Yale Corporation statement says, “If any U.S.-based company operating in South Africa in which Yale owns stock refuses to commit to the Sullivan Principles, or has not used their best efforts to fulfill them in a reasonable amount of time, the University will consider alternative action, which could include disposing of their shares in the company.”
Harvard will not hold stock in companies that do more than half their business in South Africa, or certificates of deposit in banks that make loans to the South African government. According to Michael Blumenfeld, vice president for student affairs at Harvard, “Harvard will consider divesting stock in companies when the company has substantially failed to meet ‘reasonable ethical standards,’ and there is no hope for improvement. Those standards don’t necessarily have to be the Sullivan signatories—it’s conceivable the company can be doing right by its employees without strictly adhering to those signatories. Through our own investigations we determine if they’re performing to ethical standards.”
Harvard, however, has resisted student pressure to sell all holdings in companies that do business in South Africa. “Harvard, as I understand it is with Brown, does not have a blanket policy when it comes to divesting. We can do more as a shareholder, continuing our exhortation and inquiries, than we could by divesting,” Blumenfeld concludes.
This article originally appeared in the Brown Alumni Monthly, May 1984, Vol. 84, No. 8.
To read the resolution of the South Africa Divestment, please read our archival article from March 1986, Vol. 86, No. 6.
