Editorial: Investing in and with ethics

While the University declined to comment on whether it is invested in HEI, the protest marked the second time in three months that a University investment has prompted campus debate, as the University’s holdings in Zimbabwe drew scrutiny last fall. Both occasions have called into question the ethical standards of and lack of transparency relating to Princeton’s investment policies.

In a December letter to the editor, Provost Chris Eisgruber ’83 said the Princeton Investment Company (PRINCO) follows three principles as it manages the University’s investments: maximizing returns; refraining from taking institutional positions about external issues of a political, economic, social or legal character; and limiting investments only when a central University value is at stake.

The Editorial Board believes these criteria are wholly insufficient. To both ensure ethical investing and respond to legitimate public concerns, Nassau Hall should establish a committee to bring substantive ethical review to the University’s investments.

The University’s current review policy is outlined in a set of guidelines issued in 1997 by the Board of Trustees. These guidelines mandate that the Council of the Princeton University (CPUC) Resources Committee will consider the ethics of a holding only when there is “considerable, thoughtful, and sustained campus interest in an issue involving the actions of a company or companies in the University’s investment portfolio.”

The guidelines state that achieving the necessary level of interest may require that the scrutiny last “over an extended period of time, say two academic years” and also take into consideration the “magnitude, scope, and representativeness of the expressions of campus opinions.”

This is a reactionary review system, implying that University investments do not need ethical review unless the Princeton community notices that they are not ethical — no easy feat, considering those investments are cloaked in secrecy. This lack of routine review and transparency is troubling, and the overly onerous process of challenging investments means that reasonable concerns do not have sufficient channels for consideration.

Harvard and Yale both take a more active role than the University in routinely screening the ethics of their holdings, appointing advisory committees composed of students, faculty and alumni that meet regularly to evaluate ethical investments policies regardless of community interest in a particular investment.

The CPUC should create a standing advisory committee — modeled after those at Harvard and Yale — composed of students, faculty members, administrators and PRINCO representatives. The committee’s first duty would be to articulate stronger fundamental principles to guide future investment. It would then conduct regular reviews of the University’s investment holdings to ensure that they adhere to these principles. By ensuring that routine reviews remain confidential, PRINCO’s non-disclosure policy would not be compromised in the process.

The committee would also provide a forum for members of the Princeton community who encounter ethically questionable investments. Rather than setting the bar for community-induced review at “sustained” interest, the committee should establish concrete procedures for reviewing concerns. This would allow concerns without a substantial campus following — but that are still reasonable and valid — to be considered.

As a community dedicated to the pursuit of truth, knowledge and the public good, Princeton has a responsibility to ensure that it invests in an ethical manner. The current absence of an investment review system threatens the core values of the University, and creating a committee to regularly assess the ethical ramifications of University investments would immediately contribute to protecting those values.