HEI Reconsidered

Not reinvesting in hotel company is the right choice for Harvard

Last year, in light of numerous labor abuse allegations faced by HEI Hotels and Resorts, The Crimson urged the Harvard Management Corporation to investigate the charges against the company and consider not reinvesting in it. As of last week, Harvard has joined Yale, Princeton, Brown, and numerous other universities in deciding not to reinvest in HEI. By not reinvesting, Harvard does not liquidate its current investments in HEI, but rather makes a pledge to not provide the company with more capital in the future.

In light of the recurring allegations of labor abuse that HEI has been unable to refute successfully, Harvard has surely done the right thing in deciding not to reinvest and announcing publicly its decision. Workers at the company, most prominently those lobbying for union representation, have repeatedly complained of mistreatment. The activist organization Students Against Sweatshop Labor claimed in a report that the hotel chain cuts costs by reducing staff levels excessively and forcing remaining employees to work in unreasonable conditions. Shockingly, at one HEI property, 80 percent of housekeepers reported work-related injury. Just last week, workers at HEI-owned Le Meridien Hotel right here in Cambridge   publicly voiced discontent over their work conditions.

Although it is our belief that Harvard acted appropriately, the institutional process to arrive at this sort of measure could be significantly improved. The Corporation Committee on Shareholder Responsibility, the body within the HMC that considers the social ramifications of the university’s investments, is limited to proxy voting and has no influence over new or current investment decisions. Perhaps, if this group were not so limited in its power, Harvard would not have been among the last of its Ivy League peers to announce it would not reinvest in HEI. The Responsible Investment at Harvard movement has already called for a more efficient manner to reconsider investment decisions, and we urge the University to study its proposals carefully.

In addition, we find the University’s lack of transparency regarding the resolution of this matter to be both puzzling and unnecessary. Jane L. Mendillo, the president of the HMC, said in an email to University President Drew G. Faust that the decision not to reinvest in HEI stemmed from “factors related to the HMC portfolio and its strategy and needs.” We wish that ethical considerations, not financial ones, had been the motivating factor in this case; Harvard should simply not associate itself with a company engaging in the practices allegedly committed by HEI. If the labor accusations against HEI were indeed the HMC’s primary reason for not reinvesting in the company, Harvard should have said so publicly, thus taking a clear moral stance.

Mendillo’s statement suggests, disappointingly, that investment concerns had more to do with the University’s choice than a genuine ethical sensitivity. Regardless, the public outcry against HEI seems to have had an effect, and the workers and activists who so tirelessly denounced the company have gained one more victory with Harvard’s decision. We trust it is the right one.


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Investing Responsibly
At this point, we do not advocate immediate divestment from an investment such as HEI, but Harvard’s administration should seriously consider whether this may become a more palatable response in the future.
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