Macey talks ethical investment for U.

Jonathan Macey, chair of Yale’s Advisory Committee on Investor Responsibility and law professor, discussed the approaches that universities can take to approach divestment and the best way to uphold a university’s values through ethical investment with a group of student panelists on Thursday evening. Macey’s lecture, “New Investment Models and New Challenges: Ethical Investing in the 21st Century,” was organized by the Resources Committee of the Council of the Princeton University Community in response to increased concerns about the University’s endowment investments.

Macey examined the methods that the boards of Yale and other institutions use to determine whether to divest — to discontinue investment — in companies whose activities or business conduct are not in alignment with the university’s values. Macey introduced the divestment model used by Yale’s ACIR board and compared it with the methods of evaluating divestment used by other universities, such as Brown University and the University of Chicago.

“The issue is what are the constraints with respect to our fiduciary responsibilities, to help the University,” Macey said, “and then also how to have a consistent framework.”

He described the criteria that board members of the Yale ACIR use in deciding which companies to divest from, which has been compiled into a guide called “The Ethical Investor.” He also described examples of ongoing movements that call for divestment, such as a student-led protest against Brown’s investment in coal technology companies.

Macey emphasized the importance of divestment to maintain a university’s reputation.

“Frankly, people choose to come to these schools because of their reputations,” he said. “One thing we really care about is maintaining the University’s reputation.”

One of the student panelists, Aaron Hauptman ’15, took a view against divestment.

“I don’t think that divestment is a wise course of action for the University to take,” Hauptman stated, reasoning that a university’s decision to divest does not have the power to impact the activities of the company. “If we accept that the University spends money on socially good things, then maximizing the amount of money it can do so with is morally acceptable, even if it means investing in companies that may have some practices that we don’t agree with 100 percent.”

Hauptman was one of four student panelists chosen through an application process to present their views on divestment in a dialogue with Macey following his lecture. The panel also included Ben Johnson, a Ph.D. candidate in the politics department; Laura Blumenthal, a second-year master’s student in public policy in the Wilson School and Lily Adler ’15, the president of Princeton Coalition for Endowment Responsibility, an undergraduate student organization that has raised concerns about the University’s investment.

Adler and Blumenthal asked Macey his opinion on the idea of focusing on investment in companies that do social good rather than identifying current investments that do harm. In response, Macey explained that there are difficulties in quantifying what a social good is, and that there is a need to develop a new set of guidelines for that characteristic.

“We have to have some mechanism or framework for making an objective, unbiased, unsentimental determination of which of these companies are doing social good,” Macey said.

Macey noted that many universities are currently at a crossroads regarding investment and are finding it difficult to make the right decisions.

“I often kind of fantasize that if Harvard, Yale and Princeton could have a coordinated ethical investment strategy, it would be incredibly powerful,” Macey said.

The panel discussion was followed by an open discussion with audience members. The lecture was held in Dodds Auditorium.