Coalition formed to promote ethical voting

With a $9.6 billion endowment as of March 2004, the University has an enormous amount of investing power. A new student group recently formed to promote the ethical investment of that endowment.

Ben Shell '05 founded Princeton Coalition Advocating Investor Responsibility (P-CAIR) this fall to raise campus awareness of ethical investment and, ultimately, to form a student and teacher-led proxy voting committee to advise the Princeton University Investment Company (PRINCO) on proxy voting.

Because PRINCO, the company in charge of investing the endowment, holds shares in many public companies, it participates annually in proxy voting.

The process allows shareholders in a company to vote on business matters ranging from the appointment of a company board member to social issue proposals, such as making sure a garment is produced without the use of child labor or that an oil well is only drilled after an ecological impact study has been conducted.

With the exception of Cornell University, all of the other Ivy League universities and many other peer institutions already have proxy voting advisory committees to research the ethical implications of the issues at hand.

If a school's board deems a proposal unethical, it will advise the company that handles its endowment against voting for the proposal by proxy.

Princeton, which has the fifth largest endowment in the country, has neither a proxy voting advisory committee nor a set of established guidelines to inform these votes.

Ultimately, the decision to create a proxy voting advisory committee rests with the University's trustees, who are directly responsible for managing the endowment.

The University's instructions to the PRINCO managers who handle proxy votes are to "invest the endowment so as to maximize the longterm return," said University Vice President and Secretary Bob Durkee '69.

While the Resources Committee of the Council of the Princeton University Committee (CPUC) considers socially responsible ways to use the endowment, its work is not as comprehensive as that of an advisory committee, Shell said.

"At any given time," Durkee said, "there typically would be two or three outside managers overseeing the investments that produce proxy questions and, under our current procedures, we delegate responsibility for responding to proxy questions to those managers, whose instructions are to invest the endowment so as to maximize longterm return."

Ali Yewdell '05, a member of P-CAIR said, "We want to bring morality and ethics into the process of profit-making for the University."

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When presenting the proposal for P-CAIR to the USG and Assistant Dean of Student Life Thomas Dunne, Shell and the other group members met with some opposition. There was concern that P-CAIR would undermine the USG's position as an umbrella organization of student-led change. However, P-CAIR was ultimately approved.

"We're about promoting socially responsible investment in general," Shell said.

In the coming weeks, Shell will be working closely with Durkee to research the proxy voting advisory committees at other schools as benchmarks for the University.

Last year, Shell attended a conference of the Responsible Coalition for Endowments at the University of Pennsylvania's Wharton School, and this past summer he worked for the Investor Responsibility Research Center.

"There seems to be openness and willingness to talk about [the formation of a proxy voting advisory committee]," Shell said of Durkee's cooperation.

While Durkee said he is open to the idea, he said in an email that "out of the entire endowment ($10 billion), only about $300-500 million is invested in ways that present proxy issues for the University."

But a proxy voting advisory committee can affect social change.

In 2001, Swarthmore College filed a resolution that forced Lockheed Martin to include sexual orientation on its nondiscrimination policy. P-CAIR hopes to help protect against human rights abuse issues that come up in companies, factories and suppliers.