Residents Demand Answers at Council Meeting on Police Killing of Sayed Faisal
Bob Odenkirk Named Hasty Pudding Man of the Year
Harvard Kennedy School Dean Reverses Course, Will Name Ken Roth Fellow
Ex-Provost, Harvard Corporation Member Will Investigate Stanford President’s Scientific Misconduct Allegations
Harvard Medical School Drops Out of U.S. News Rankings
In a precedent-setting move, Harvard is considering divesting its stock holdings in two major U.S. tobacco companies.
The University wrote to both RJR-Nabisco and Philip Morris in July asking them to respond to charges that promotional techniques in Latin American, African and Asian nations are often heavyhanded. Harvard also asked the companies to explain why they do not place warning labels on cigarette packs, as is required in this country.
The Corporation Committee on Shareholder Responsibility (CCSR), which formulates Harvard's investment policy, sent the letters after the issue was raised by an advisory panel last spring. So far, the committee has received no response from the two multinational corporations.
"Some members of our committee...believe that Harvard, which refuses to own stock in some companies because it does not wish to be associated with particular economic activities (gambling; prostitution), should seriously consider placing the production and sale of cigarettes in that category," according to an internal memo written by the Advisory Committee on Shareholder Responsibility (ACSR). The ACSR is a panel of faculty, students and administrators which advises the Corporation on ethical investing.
Experts across the country said this week thatif Harvard were to decide to divest from tobaccocompanies it would be the first institution in thecountry to do so.
This latest move toward divestment comes aftera decade of pressure on the University to divestof stock from compnaies doing business in SouthAfrica, which led to a policy of selectivedivestment. Harvard in 1986 divested about $157million in South Africa-related stocks--about athird of its holdings at the time. That total hassince fallen to about $200 million, in partbecause of the October stock market crash.
The drive to divest from tobacco companiesseems likely to rekindle the debate about thebenefits of divestment. Harvard and other criticsof divestment have argued that in most cases, abetter alternative is constructive engagement, bywhich the University deliberately maintains itsstock to put pressure on companies.
The ACSR raised the possibility of divestmentafter a shareholder-sponsored resolution thisspring called for the two companies to report ontheir advertising and promotion campaigns indeveloping nations. The proxy fight, which wassponsored by an activist Jesuit order inMilwaukee, was not targeted against the companies'domestic business.
The ACSR said it is concerned about highprofile advertising campaigns in overseas nationsthat do not require health warnings on cigarettes.The dangers of smoking, which have been widelypublicized by the U.S. Surgeon General, are lesswell known in developing countries.
Although health warnings are now required oncigarette packaging in the U.S. and in Europe,most other nations lack such requirements. Lastyear, overseas sales by RJR increased about 10percent, although U.S. sales have remained flat.
"We believe that companies seeking to expandsales in the third world should...tellstockholders their reasons" for not using healthwarnings, the ACSR said in a May memo.
But RJR and Philip Morris have denied chargesthat their marketing techniques are tooaggressive. They also contend that voluntarywarning labels are unnecessary since smoking hasnot been demonstrably linked to lung disease.
"There is no conclusive proof of acause-and-effect relationship between cigarettesmoking and chronic diseases, and the Company willcontinue to challenge allegations to thecontrary," Philip Morris said in a report releasedin response to the proxy resolution.
But the ACSR has challenged that account. Inits report to the CCSR, it cited World HealthOrganization statistics that attribute 2.5 milliondeaths each year worldwide to tobacco use.
"We do not believe that Harvard, committed tothe scientific method and to the work being donein its hospitals, laboratories, and classrooms,can accept this response as serious and ethical,"the ACSR said.
President Bok said last week that it was"unacceptable" to deny a link between smoking andcancer, but he declined to say whether he wouldsupport a move to divest from tobacco companies.
Officials at Philip Morris could not be reachedfor comment this week. RJR spokesmen did notreturn repeated phone calls.
ACSR officials say they are currently awaitingformal responses to the letters sent by the CCSR.But it may be months before Harvard again takes upthe issue, since the next scheduled meeting of theACSR is in January.
"Once we receive the answers to thosequestions, it will be appropriate this year toconsider the question of whether we are preparedto recommend selling the University's stock intobacco companies," said Law Professor Lance M.Liebman, chairman of the ACSR.
Other committee members said after the panel'slast meeting in the spring that unsatisfactoryanswers to this new set of inquries could promptthe committee to recommend divestment. "There hascertainly been the sense that we would be verycautious about anything that would extend the saleof tobacco products," said ACSR member Carol H.Weiss, a professor at the School of Education.
But some members of the Harvard community whoare active in anti-smoking campaigns haveexpressed doubt that divesting from tobaccocompanies would produce any tangible result.
Tom Schelling, director of the Kennedy School'sInstitute for Smoking Policy and Behavior, saidthat promotion and sale in developing countrieswas definitely an important issue but thatdivestment would serve only as a press event andwould not be very effective.
"I don't think it will make any difference tocigarette companies. It would be a nice symbolicgesture if it doesn't cost too much," saidSchelling who is Littauer Professor of PoliticalEconomy. "If it's a lot of money, it would be morecost effective to put the equivalent money into ananti-smoking campaign."
School of Public Health Dean Harvey V.Fineberg, an outspoken opponent of smoking, saidhe thought divestiture from tobacco companies isnot necessary since no one is pushing for it."There has been very little clamor from facultymembers or students to have available to them aportfolio that would not include tobaccocompanies," he said. "I'm not sure it would makevery much difference."
Fineberg also said that while the Universitymight well decide that it does not want to beinvolved in an industry that promotes the onlyproduct known to cause death when used properly,sales in developing nations were only one smallaspect of a larger problem.
Nonetheless, international tobacco sales arebecoming an increasingly important issue and arallying cause for health organizations both hereand in East Asia, the most recent target forsophisticated marketing strategies.
In the wake of national and municipallegislation in the U.S. banning smoking in publicplaces and on airplanes, opponents of smoking havebegun to wage their battle on the internationaltrade front.
Greg Connolly, analyst and adviser for theMassachusetts Public Health Department and for theWorld Health Organization, said that tobaccocompanies in the 1960s began sales campaigns inLatin America, opening closed markets and slowlyincreasing cigarette consumption. The sales pushoccurred in spite of growing domestic awareness ofsmoking hazards, he says.
Since then, multinationals have opened marketsin Africa and most recently Asia, sparking a majorfuror in some of the target market countries.
The latest assault by the tobaccocompanies--including Philip Morris and RJR--hasbeen on formerly closed markets in Japan, Korea,Taiwan and China. In all these countries tobaccoimports were prohibited or severely restricted inrecent years. In Korea, for example, it was acriminal offense to carry an imported pack ofcigarettes.
Many restrictions were lifted after bargainingefforts by the office of the U.S. TradeRepresentative, which threatened to imposeeconomic sanctions if tobacco compnaies were notallowed to trade on equal footing with domesticproducers.
But critics charge that the American companiesare moving beyond parity with Asian tobaccocompanies. The multinationals are spending hugeamounts of money on advertising, some in countrieswhere cigarette advertising was recentlylegalized. They are also distributing free samplesand using other promotional techniques now bannedin most Western nations.
Some tactics were never used in the UnitedStates. In February, for example, RJR-Nabiscoplanned three concerts by noted Hong Kong singerHsow-Yu Chang in Taiwan. Fans could not pay fortickets with money, but were required instead to"pay" with empty cigarette packs. Five packs wereredeemable for a ticket.
But after a public uproar, promoters wereforced to cancel the performances, and promised toredeem empty cigarette packs for a cassette tapeof the singer.
The U.S. companies are aiming to tap newmarkets in East Asia, where a large percentage ofadult males smoke, though consumption remains low.Traditionally, few women and adolescents have beensmokers.
In order to enlist new smokers, companies areairing commercials during music video programs.Virginia Slims cigarettes are currently marketedspecifically for women in campaigns that attemptto link smoking with fashion.
In most developing nations there are no lawsrequiring health warning labels on cigarettepacks. Cigarette warnings that do exist are oftenvague and much less strident than their Americancounterparts. In Taiwan, the government-ownedcigarette company uses a label that reads: "PleaseDo Not Smoke Too Much For Your Health." Americancompanies do not use any warnings forinternationally sold packs.
In addition, anti-smoking groups have chargedthat U.S. tobacco companies sell cigarettes abroadwith higher tar and nicotine content than thosesold in the United States.
Thus far the promotional techniques have madetobacco companies a rare success story in a decadethat has seen the decline of most U.S. exports.Philip Morris reports that in 1987 it sold $1.7billion worth of cigarettes internationally, up 10percent from the year before.
But the success has raised the ire of many inthe new markets. In the Philippines, a classaction suit has been filed against U.S. tobaccocompanies that advertise on television, chargingthat they have not allowed Filipino children thesame protection American children have againstexposure to TV smoking ads.
Health experts say that if the current increasein tobacco consumption in developing nations isnot curbed quickly, it will result in the mostserious disease epidemic ever known. World HealthOrganization expert Connolly estimates that by theyear 2000, there will be 900,000 smoking-relateddeaths in China alone.
But most opposition in this country has beenconfined to the recent proxy battle. MichaelCrosby, executive director of the InterfaithCenter on Corporate Responsibility, whichsponsored the recent shareholder resolution, saidthat his organization bought 10 shares severalyears ago in order to force a dialogue with thecompanies through shareholder resolutions andannual meetings.
Otherwise there have been no moves byshareholders to protest these companies' actions.Connolly said that of the 25 largest insurancecompanies doing business in Massachusetts, 19 ownstock in tobacco companies.
The issue has not yet been discussed at otheruniversities, officials said this week. But manyexperts say that investor responsibility questionswill become more prevalent in the next few years.
"This will be a major issue in the next fouryears," Connolly said. "We need to getorganizations to ask questions about their owninvestments."
It is possible that the international tradeissue will serve as the rallying point forinvestors to consider the ethics of having tobaccocompanies included in their portfolios.
"The basic question is, 'Do we want to beassociated with tobacco companies?'" Finebergsaid. "To me, the harmful effect of tobacco is oneof the clearest kinds of problems to face."
Want to keep up with breaking news? Subscribe to our email newsletter.