Officials Reaffirm South Africa Stock Policy

News Analysis

The statement of a Corporation spokesman which sparked the most recent furor over University investment policy towards firms operating in South Africa really represents no change in Harvard's investment policy.

The comment from Hugh Calkins '45, chairman of the Corporation subcommittee responsible for deciding how the University will vote on shareholder resolutions, that Harvard makes its initial investment decision primarily for economic reasons follows the Corporation's official policy adopted in 1978. Calkins and other Harvard officials have maintained in recent interviews.

According to the current policy. Harvard does not have to determine before it invests in a certain company whether or not that company has fulfilled certain ethical guidelines for doing business in South Africa, Calkins said.


Calkins added that the Corporation begins a dialogue with the company concerning its practices once it buys stock in the firm, but that it is not practical to have this discussion until after Harvard invests in the company.

There is not enough time Calkins said, to investigate thoroughly a company's involvement in South Africa before buying the stock, adding that by the time such evaluation could take place. Harvard would miss its chance of buying the stock at a good price.

"Injecting the South African review policy into buying stock doesn't seem to me to be a very practical or desirable an idea." Calkins said, adding that if the University began its review before buying a stock, it could be seen as putting economic pressure on a company. He said that it is not the role of an academic institution to put such pressure on private corporations.

The University has never divested from a company because it has failed to follow Corporation guidelines on fair labor practices in South Africa. The Corporation is, however, currently corresponding with the Carnation Company which has failed to meet the guidelines for the past three years.

In response to the accusation that Harvard does not take any ethical considerations into its decisions to buy stock, Calkins noted that the Harvard Management Company--an independently run company that manages Harvard's portfolio--does not invest in companies that do more than one-half their business in South Africa.

Harvard Management instead looks at how a company's economic performance is affected by its business practices, President Walter M. Cabot '55 said yesterday.

He added that although there is no written rule, the management company will take into account what he called "ethical" considerations in some cases if the company has been convicted of fraud, antitrust, or of illegally polluting the environment. He said that he used his discretion and would not invest in "a brothel or one that sold illegal drugs."

President Bok also defended the morality of University investment policies last week. Bok pointed out that, although the University does not check into every company individually. Harvard's refusal to invest in banks that do business with the South African government or companies which have more than 50 percent of holdings in that country indicates that Harvard does "not purchase categories of stock for moral reasons."

ACSR Response

Calkins' original comment was made during a meeting between members of the Corporation and the Advisory Committee on Shareholder Responsibility (ACSR). Several members of the advisory committee, which makes non-binding recommendations to the Corporation on ethical issues it may face when handling its $2-billion endowment, said Calkins' statement strayed significantly away from what Harvard's official investment policy should be.

Members of the committee said they were shocked to learn that Harvard does not use the Sullivan principles, a set of equal-opportunity and fair-labor practices for U.S. firms operating in South Africa as a screen for weeding out companies Harvard should not invest in.