For more on how to run an effective committee on investor responsiblity, read our new handbook for responsible investment committees, available as a PDF download here.
What is a committee on investor responsibility?
There are many great ways to move towards responsible investment, but schools often fail to research, understand, and act on them. In many cases, this is because schools have not made an institutional commitment to extending their missions to their investments. For activists, this leaves two choices: choose a single responsible investment strategy and run a campaign to get it implemented, or run a campaign to demand an institutional commitment to responsible investment.
This is an easy choice to make. Incorporating a responsible investment committee into the institutional infrastructure of your college or university can lead to greater long-term financial and ethical impact than having the school write a single letter or sell a single stock. When a school makes a commitment to explore responsible investment by setting up the institutional infrastructure to do so, it opens the door for future research, dialogue, or action. REC’s goal is to support the alignment of an institution’s investment with its values in the long term. A Committee on Investor Responsibility is the best way for most communities to take the first step.
The work is not finished once a committee is created, but the existence of a committee creates a legitimate forum for discussion and exploration of the world of responsible investment. It also streamlines the process of bringing a community’s concerns into the decision-making structure. The University of Pennsylvania, for example, divested from Sudan in months rather than years, partially because Penn already had a committee in place to make recommendations and exercise influence within the university bureaucracy.
What do committees look like? How do they work?
The primary function of committees is to explore and act on the extension of the values and mission of the school to investment decisions. Each institution is different, but committees in the past have voted proxies, filed shareholder resolutions, researched and recommended new responsible investment tools or strategies, developed proactive investment proposals (such as investing in the community or divesting from a highly controversial firm), and served as an access point for any interested university member who wants to comment or request action on ethical issues concerning the endowment. At many schools they also serve an explicit educational purpose and interface with the community around these issues. Most report to either an investment committee of the Board of Trustees or directly to the investment office. They are almost universally advisory in nature, but most committees report that it is rare for their recommendations to be ignored. Most committees meet throughout the year.
Who serves on these committees?
The most effective committees on investment responsibility are those that are multi-stakeholder and represent different constituencies and interests: undergraduates, graduate students (if applicable), alumni, faculty, staff, administrators, and even trustees have all served on committees. REC recommends the presence of unpaid or paid staff in a supportive capacity, which can enhance and deepen the efficiency and efficacy of a committee’s work. At many institutions, committee members are elected or appointed to represent different constituencies, while at others the committee members set up their own application process for new members.
Are committees on investor responsibility common?
A sea change has occurred from the days of the earliest ad hoc committees set up to address the South African anti-apartheid divestment movement to today. Over the past ten years, committees have gone from an uncommon practice to an essential component of the investment process and part of a constructive administration-community relationship. There are now over 40 committees on investor responsibility at all kinds of colleges around the country.
The number of committees has roughly doubled in the past decade. In addition, many have expanded their purview significantly from a simple dialogue, research, or proxy voting capacity to a much more comprehensive approach. The interest in incorporating responsible investment into higher education has also spread from private institutions to public ones, with recent active campaigns for committees taking place in the public school systems of California, Arizona, Oregon, Michigan, North Carolina, Texas, and several others.
By the beginning of 2011, there were over forty multi-stakeholder responsible investment committees in the United States, and many other campuses actively advocating for their creation. Many of the most highly respected institutions in the United States today now have committees, including Stanford University, Duke University, and six of the eight Ivy League institutions. REC is proud to say that it has provided support in the formation of many of these committees, and we support the creation of new ones, as well as strengthening of existing committees, across the country to this day.
How do committees remain active and effective?
An educated community is essential for campus groups and other parties to advance their causes. Many live and die by the awareness of the student body. The push that the community applies to the committee – and vice versa – inspires action by making the committee accountable and broadly supported in their decisions. Educating the university community and understanding the importance of a committee’s work are major components of an institutional commitment to responsible investment.
How does REC support committees?
REC founded the Committee Members Association in 2007, which brings together committees on investor responsibility from around the country for an annual meeting and ongoing support from REC staff. We can also help committees individually by connecting them to shareholder advocates, responsible investment experts and others. Together, CMA members have collaborated on REC’s vote and engage initiative, and hosted annual meetings at Columbia University, the University of Pennsylvania, and the New School. If you are a member of a committee on investor responsibility, whether student, faculty, administrator, alum or trustee, and would like to get involved, please contact us.
For more information on CIRs, we encourage you to read our Handbook for Committees on Investor Responsibility (PDF).