The ACSR Shuffle


THE UNIVERSITY'S recent sale of over $600,000 of stock in banks lending money to the South African government and its public corporations brings up serious questions about the performance of those firms responsible for making decisions about investing Harvard's $1.5 billion endowment. At times that decision-making structure, which includes the Treasurer's office, the Advisory Committee on Shareholder Responsibility (ACSR), the Corporation, and independent investment firms, seems designed mainly to spread the responsibility for Harvard's morally bankrupt investment policy and to provide a justification for maintaining the investment status quo.

It is conceivable that the bank stock sale was a purely financial decision. But if the University decided to unload bank stock that had proven to be more trouble than it was worth, it surely would have chosen to do it this way--with a minimum of publicity, without meeting the inherent social issues head-on, without having to take a moral stand.

Mackay Shields Financial Corporation, the investment firm that bought the Citicorp and Manufacturer's Hanover stock in 1976 and recently sold it, seems to have been unaware of the importance on campus of the divestiture issue. While Shields and the four other independent firms helping to manage Harvard's investments only control about 10 per cent of the portfolio, it is irresponsible for Harvard to let anyone make University investment decisions without considering the social implications of those decisions.

Clearly the University must take a stand on the larger issue of investing in any corporations helping to uphold the apartheid system, but it seems naive to expect any significant anti-apartheid decision to emerge from the ACSR, the group entrusted with advising the Corporation on social implications of investment policy. The ACSR has been meeting since October to discuss the South African issue, and although it has made slow progress in reaching a decision on the issue, it is trying to meet an unofficial mid-March deadline for hammering out a policy towards companies with ties to South Africa. Despite the ACSR's decision to double the number of meetings each week, it seems unlikely the committee will finish its South African discussions in two weeks, based on reports of the deliberations of the committee and the amount of ground left to be covered before a final decision can be reached.

If the ACSR's history tells us anything it is that the decision, if and when it finally occurs, will be too little. It is already too late. Many campus groups, most notably the Southern Africa Solidarity Committee, have called on the University to sponsor shareholder resolutions for companies in the portfolio that operate in South Africa to withdraw from that country. The deadlines for this year for sponsoring such resolutions in many companies have already passed or will soon pass--usually a shareholder must initiate a resolution 90 days before the annual company meeting in April or May--and by not reaching a decision in time Harvard has implicitly decided not to sponsor such resolutions. Harvard has never sponsored any shareholder resolutions, and has only infrequently supported other people's resolutions. No one really expected the University to change its investment policies this year, either. Generally the University prefers to send letters to companies in the portfolio that engage in some sort of frowned-upon activities asking them to stop the offending actions or simply to cooperate with those asking the company to stop.


The ACSR is only an advisory board, recommending policy to the Corporation Committee on Shareholder Responsibility, which tells Harvard Management Company, an investment firm set up in 1974 to control 90 per cent of the portfolio, what to do about Harvard's investments. The Corporation accepts about 90 per cent of the ACSR's recommendations, but on sensitive issues the Corporation has a nasty habit of abstaining on shareholder resolutions if the vote of the ACSR on what policy to recommend isn't lopsided--no clear mandate, you see. But even when the Corporation does accept the ACSR's advice, it is not a case of listening to a different viewpoint but of choosing people to serve on the ACSR in the first place who will probably tell them what they want to hear. The ACSR is composed of four students, four faculty members and four alumni. Considering the relative numbers of students, faculty and alumni in the University, this composition grossly underrepresents students. The faculty and alumni members are always overwhelmingly from the business and financial worlds, as is the Corporation itself--this year's ACSR contains one economics professor, one business professor, one professor of political economy, two lawyers and a bank vice president, for example. It is unrealistic to expect a body with this built-in conservative financial bias to make socially responsible investment decisions.

This underlying tendency towards amoral investment policy is heightened by the ACSR's decision to restrict the Harvard community's access to investment decisions. The ACSR operates in a shroud of secrecy, and gives the same reason so many other Harvard institutions do as a justification--if the meetings were public, people would not be free to speak their minds and play devil's advocate on issues so the committee can consider all possible viewpoints. This defense of secrecy is simplistic--all too often the purpose of secret deliberations is to protect from the public's rightful wrath ACSR members who sincerely, not hypothetically, espouse socially irresponsible investment policies. Secret deliberations also effectively prevent concerned students from mobilizing support for progressive decisions on individual issues--if you don't know what the ACSR is discussing, you can't convince them to play it your way on the issue. The secrecy of the ACSR is even more indefensible now that the group of representatives from the Houses and the Yard that chose the undergraduate ACSR member decided to continue meeting to research upcoming ACSR issues and advise the undergraduate representative of student views on these issues. The group's legitimate and admirable aim is effectively thwarted by the ACSR's operating procedure.

Still, the ACSR's performance this year surpasses its behavior last year, when the combination of even more secrecy in its operations plus bureaucratic ineptitude made a joke of the idea of the ACSR serving to monitor, distill, and relay to the Corporation University sentiment on investment decisions. The ACSR has analyzed the issue of Harvard's involvement in companies with links to South Africa much more thoroughly this year, and has held an open hearing to allow interested observers to present their viewpoints to the committee.

The ACSR has given some indications that it will recommend an investment policy this year which will be significantly less kindly to companies upholding apartheid. The Committee has not made that decision yet, though there have been advance signs that the ACSR has already ruled out some of the more far-reaching possibilities, like divestiture of stock in offending companies, and it is always possible, though highly doubtful, that it will recommend a socially progressive investment policy to the Corporation. It is too early to damn the ACSR for a decision it has not yet made, but at times it seems to be merely an elaborate charade--a way for the University to continue making the investment decisions it has always made while appearing to be socially responsive.