I must say, just as an aside, that that example, and a number of others that have occurred this spring, has caused me to modify to some extent my assessment of the power of the responsibly generated shareholder resolution. One can find a number of examples of these in the IRRC documents that are available to everybody in Lamont Library, at least I hope they are--someone claimed at the CHUL meeting yesterday that they weren't.
I would also like to say with respect to this issue that these judgements are subject to change, they require continued monitoring and vigilance from us, and from other interested parties.
Reverend Leon Sullivan is expanding his operation so that he will have an on-site monitoring capability, and we hope that he is including in his plans, or has an intent ion of, distributing his efforts on a company-by-company basis to interested shareholders like Harvard. He has not done that thus far and has forced the University in the form of the ACSR to sort of duplicate a great deal of what has gone on, and I will describe that briefly now.
I would like to say that the Rev. Sullivan, whom I had a chance to hear speak for the first time in New York at a Ford Foundation conference of university trustees last week, expressed precisely the same anguish that I have felt in trying to make a judgement about the question of withdrawal, or not withdrawal but staying and attempting to accomplish something good, however minimal. I was heartened by that; it's the thing that has caused me the most sleepless nights.
The second question that I'd like to address is the question, should companies expand by investing in South Africa? I think the answer to that question should be no. The reason is that while the existing assets will be used, if not by us, then by others, it seems to me no reason to expand the assets and the wealth of the South African economy by investing now in view of the serious risks. Conditions will deteriorate in that country in the very near future, and those assets will be used to the detriment, rather than the benefit, of black South Africans.
The third question, which the ACSR has wrestled with, and which I have wrestled with as well, is, should we sell the stock? I think the answer to that question should be no. And the reasons are, or among the reasons are the following:
First, in my judgement, that act, by itself, has not and will not be effective in influencing the behavior of companies.
Secondly, it removes us from the dialogue and substantially diminishes our ability to support responsible efforts by church groups, the Rev. Sullivan, and others to make the companies change their policies. It produces no noticeably long-run economic effect on the companies so that from the point of view of direct economic leverage, the only leverage is the one that comes back to us. I share, and this is a personal view. I share the reservations about the use of economic leverage that were expressed in President Bok's recent open letter to the Harvard community. It is an act which is costly to Harvard, and while I would be happy to answer questions about the assessment of the costs of this policy, suffice it to say that we are talking about excluding, as a matter of policy, a set of companies which taken in the aggregate constitute roughly 46 per cent of the market value of the Standard & Poor's 500, which is the set of large, well-managed, high capitalization companies in the United States economy.
It may also not, excluding such a body of companies, may not be consistent with the fiduciary responsibilities of the Harvard Corporation, and I suspect that it would be difficult to hold high-quality, creative investment management personnel under those conditions.
Finally, I would like to address some remarks to the question of what has been going on, and what will be going on this spring with respect to the South African issue, assuming that there is no change in the policy of the Corporation. First, in January, the ACSR issued a report on the question of actions that a university should or should not take as a shareholder. I'd like, in view of remarks that have been made about this report, to say several things about it.
First, and most important, it is not the policy, as far as I know, of the Harvard Corporation because it has not been considered by them the way that the report of the ACSR was last spring.
The second thing is that it was a response to a specific question put to the ACSR that was not put only with respect to the South African issue, and that question was, should Harvard, and if so under what circumstances, be in the position of initiating shareholder resolutions? And it was in that context, and I feel that it is important for me to some extent to defend my colleagues on the ACSR, it was in that context that we chose to go back and consult the historical documents and the evolution of the thinking on the University's appropriate role in a number of contexts, but I would ask that that report not be read simply as another set of remarks on Harvard policy with respect to South Africa.
In roughly a week the ACSR will complete and issue a report on the South African operations of the 49 portfolio companies, companies in Harvard's portfolio, that have operations. This report is based on the answers to the Sullivan questionnaire, answers to letters written by Harvard, and answers to the IRRC questionnaire. It's difficult to generalize about the contents of those questionnaires and the contents of the data we collected. I think it would be sufficient for the moment to say, first, that they do not paint a rosy picture of the situation in South Africa, and secondly, there is considerable variance, apparent variance, in the level of efforts the companies are devoting to, particularly, employment policies. There are a number of companies in that set which have chosen not to respond to requests for information, and we are going to recommend that they be requested in forcefully worded requests to provide that information to us; we have also suggested that it may not be inappropriate--well, this is again not Corporation policy--to ask for that information in the form of shareholder resolutions. But I personally would not be averse to voting against management on resolutions that were introduced with respect to these companies concerning their South African operations on the ground that we have no information telling us they're doing anything beneficial in that country, or, to be specific, it is my current view that if requests for information from those companies have not been responded to, a motion for withdrawal is put to the corporation in the form of a shareholder resolution, I would be inclined to support it, and I think there are a number of other people who feel the same way.
Harvard will, I hope, continue to support the efforts of the Rev. Leon Sullivan, whom I think has the best long-run chance of producing substantial changes in companies' operations. He is, I stated earlier, engaged in a monitoring effort which I would very much like to see us support. In the meantime, in the next six weeks we will face 40 resolutions directed at 22 companies. Some of these resolutions are, many of them, in fact, concern the South Africa matter. I have had a number of people express the concern to me that the process of collecting information and digesting it on South African companies is sufficiently lengthy, ongoing, and currently incomplete, that we will not respond at all to these resolutions.
I want to assure the Faculty, and the members of the Harvard community, that both the ACSR and the Corporation will respond on a timely basis to all the relevant shareholder resolutions, and in so responding we will use whatever information, wisdom and judgement that we have available to us at that time. We will also respond to questions from the undergraduate Harvard shareholder responsibility group concerning our procedures, as time permits.
I would be happy to answer questions about these or other matters that affect our policy on South Africa. I do want to convey to you, though it is not always obvious, that there is a group of 12 people who have spent the better part of this year trying, in the name of the long-run objective of altering companies' behavior in South Africa, who have spent this time learning about this behavior, trying to formulate policy on it. I would like to see us give this policy some continued opportunities to succeed. I think, if I had more time, I could cite evidence for you, but it is working in a number of instances.
Thank you