The costs of divestment

March 7, 2013, 12:24 p.m.

Recently there has been much commotion on campus in regards to the University’s investment portfolio. The Stanford Students for Palestinian Equal Rights (SPER), along with dozens of other activist and community organizations on campus, pushed for the Undergraduate Senate to pass a bill that would recommend the Board of Trustees to divest from corporations involved in the Israel-Palestine situation (the bill did not pass).

And while this divestment campaign has been a fixture in recent years, another divestment campaign has begun: Students for Sustainable Stanford (SSS), following the lead of other campus groups concerned with climate change, has called on the University to freeze investments in fossil fuel companies and permanently divest within five years. SSS has opened up a petition and recently chalked slogans in White Plaza.

At the core of these campaigns is a vision for the University to uphold its commitment, as stated in the Founding Grant, to “promote the public welfare by exercising an influence in behalf of humanity and civilization.” While the Board of Trustees’ primary responsibility regarding the endowment is to maximize financial return taking into account risk, they also have a responsibility to examine the nature of the companies they invest in: when it is determined that the “corporate policies or practices of a company Stanford may invest in could cause substantial social injury [the trustees], as responsible and ethical investors, shall give independent weight to this factor.”

Given these potentially conflicting priorities, the investment debate becomes more complex than many realize. It is not enough to merely show that a company is complicit in the violation of human rights- “social injury” is just one factor in the endowment decisions. The flawed assumption that divestment campaigners make is that Stanford is obligated to divest from corporations if they are shown to be unethical.

Of course, a divestment advocate would likely respond that divesting, whether or not the Board of Trustees must do it, is the “right thing to do.” I, however, would like to question that logic. Going back to the Founding Grant, we must ask ourselves what it means to “promote the public welfare.” Does it entail only investing in corporations deemed ethical? Or should Stanford maximize its endowment returns in order to maintain and expand internal programs that, in theory, do work that improves the world?

This ideological conflict of commitments is thrillingly dramatized in Major Barbara, George Bernard Shaw’s 1905 play. In the play, there is a scene in which the leaders of a Salvation Army shelter must decide whether to accept a ten thousand pound donation from two men, one who made his fortune from whiskey and the other from weapons manufacture. The immoralities these men represent—alcoholism and warfare—are as incongruous with the mission of the Salvation Army as possible, and Shaw spares no gruesome image in making this fact apparent. Mrs. Baines, the Salvation Army commissioner, ultimately accepts the money despite the protest of one of her officers. As she asks, “will there be less drinking or more if all those poor souls we are saving come tomorrow and find the doors of our shelters shut in their faces?”

Certainly, Shaw’s play is a simplification of the investment dilemma Stanford faces. There are similarities worth noting, however. Ostensibly, Stanford invests in corporations that deal in fossil fuels or Palestinian oppression because these are profitable investments. This money does not disappear- it is used to fund departments, research, financial aid, and more. While Stanford is in no danger of shutting down, who knows what innovations or ideas can be linked to the extra money that “unethical” corporations have brought in? If we are of the opinion that this University does work to improve humanity, we may only constrain that mission by limiting investments to “ethical” corporations.

If you were Mrs. Baines, would you have accepted the money? Let Adam know at [email protected].

Adam is a senior from Illinois. He is majoring in Biomechanical Engineering, although his intellectual interests span dozens of departments. This is his second year writing for the Daily (you may remember him from his work last year on the Editorial Board). Outside of writing, Adam enjoys acting, skiing, making music, and thrift-store shopping.

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