"My general impression is that the Corporation takes very seriously the advice given it by the advisory committee," he says, adding. "They do not disregard they regard carefully and disagree. And their desk is the place where the buck stops on this issue."
And College Treasurer George Putnam '49, a Corporation member, says that the committee is "consistently helpful" to the Corporation, but he adds that the Corporation takes a wide number of factors into account in evaluating the ACSR's recommendation. He cites this year's high absenteeism at ACSR meetings and says the Corporation must ask itself. "Would the whole ACSR vote that way," on a particular issue? And he criticizes what he sees as the occasional politicization of the advisory committee--and tries to make sure the position of the committee always represents "intelligently achieved points of view."
Both Putnam and Walter M. Cabot, president of the Harvard Management Company which is responsible for the day to day handling of the University's investments, have said that they consider themselves ethical investors. For instance, they have said that they don't invest in companies which ignore environmental concerns. Such companies may be acceptable short term investments but eventually, Putnam and Cabot point out, such firms will have to pay for their excesses and are thus bad investments.
Indeed on a wide variety of issues--corporate governance, infant formula, and many other less publicized debates--the ACSR and the Corporation have generally agreed.
On all the shareholder resolutions before Harvard from the beginning of the ACSR through 1981, the Corporation and the Advisory Committee have agreed roughly 70-80 percent of the time.
Nonetheless, certain issues have caused conflict between the two bodies--like South Africa, or, this year's debate over whether to invest in companies which produce nuclear weapons. The nuclear arms question is a good example of the kind of logic used by the Corporation when it opposes the ACSR on a particular issue. This key to understanding the process is the word procedent.
Corporation members emphasize that they try to be consistent on issues over the years. But the ACSR which has five or six new members each year, it has been suggested, might be inclined to switch positions on a particular issue. But while the ACSR is able to change its recommendation on an issue, the Corporation, Putnam says, has got to have a "damn good reason" to switch positions. For instance, in 1981 the ACSR and the Corporation both opposed a resolution asking American Telephone and Telegraph (AT & T) to set up a review committee on a nuclear weapons laboratory. When the resolution was resubmitted this year--perhaps because of a new mood in the country or because of changing membership--the ACSR endorsed it. But the CCSR, not refused to follow the Advisory Committee's lead. The Corporation did not actually oppose the resolution but abstained. Not voting is usually interpreted by a company as a vote for management, but when it abstains. Harvard is careful to make save the company does not do this, and records their position as non-committed.
But the Corporation's expressed devotion to precedent can also be a double-edged sword. Students were baffled earlier this year when it seemed as if the Corporation was trying to go back on the University's ban on doing business with banks which lend money to the South African government after it had sold $50 millions worth of certificates in Citibank which had made an ostensibly humanitarian loan to the apartheid regime.
When the policy was first adopted in 1978 the reasoning was that although some loans might possibly be "beneficial" to South African Blacks, the aggregate effect of them would reinforce the apartheid system Activists asked what has changed since 1978' And they complained that the burden of proof was once again on them to show why the bank loans were bad, when--by precedent it should have been the Corporation showing new evidence in favor of changing the policy.
As Valelly notes. "The whole Citibank issue showed to me they had no respect for precedent Kenneth Propp. a third-year law student and, former member for the ACSR, adds that citing precedent is an"unjustifiable tactic" by the Corporation because it serves as a pretext for covering up serious disagreements with the ACSR.
Despite the outcry over bank loans, there is likely to be little change by the Corporation over the use of precedent. And there will continue to be sources of disagreement over what the direction of the ethical management of Harvard's portfolio should be.
Can the ACSR play a role in picking out what this direction should be? The University obviously thinks so, and as far as students are concerned the answer seems to be a qualified yes. Helping make direct decisions is not in the cards, but in a number of different ways, the ACSR has had and still has the potential to influence policy.
As Flaherty and others point out, the ACSR makes it impossible for the Corporation to ignore moral considerations in investment policy. This is especially crucial in times, such as now, of low student interest in investment issues. Propp says in addition that the advisory committee can serve as a "lighting rod" for student concerns. "The existence of the ACSR has prevented the Corporation from sweeping [moral issues] under the carpet" he says.
This seems to be the ACSR's most important function. For while the 300 or so people who showed up at the March ACSR open meeting on South Africa bank loans seemed like a lot, the crowd pales is comparison to the over 3000 people who stormed through. Cambridge in 1978 on a condlelight march to protest Bok's refusal to divest from companies operating in South Africa. The ACSR seems to serve a pivotal role in at least keeping the Corporation thinking about some of the issues involved in ethically managing Harvard's immense portfolio.