4. Harvard does not invest in debt securities of any bank that makes loans to the government of South Africa.

To evaluate the affirmative employment practices of those companies in which Harvard holds stock the CCSR has relied on the annual Sullivan Principle reports prepared by Arthur D. Little, Inc., the Investor Responsibility Research Center South Africa Review Service publications, and correspondence with companies that do business in South Africa. The Sullivan Principles are six principles originally developed to guide American-owned companies operating in South Africa. For a signatory company to be rated by Arthur D. Little, Inc., which monitors implementation of the Sullivan Principles, it must meet nine basic requirements with respect to nonsegregation of facilities, equal and fair employment practices for all employees, and equal pay for equal work (principles one through there). Once a signatory has passed the basic requirements, the rating process evaluates how the company has progressed in the areas of education for non-employees, training and advancement and community development (principles four through six). The Sullivan requirements are periodically tightened to keep pace with economic conditions and to promote changes within and external to South Africa.

This past year the CCSR proposed and, with the support of the ACSR, initiated a program of intensive dialogue with several of the portfolio companies who are not Sullivan signatories in good standing. This dialogue has consisted of correspondence and personal meetings between the Secretary of the CCSR and company representatives. The CCSR has also written to the other portfolio companies who are not Sullivan signatories in good standing, and intends to engage in more intensive dialogue with them in the near future. The CCSF has stated that it will, as a general guideline, recommend divestment of a company that has failed to show, within a year after intensive dialogue is initiated, reasonable signs of progress in demonstrating compliance with Harvard policies. The CCSR has not accepted the ACSR's 1983 recommendation that Harvard not in the future invest in any company that is not a Sullivan signatory in good standing.

II

Six of twelve members of the ACSR join in this part of the Report, which outlines their case for Harvard's careful and responsible divestiture of its holdings in companies doing business in South Africa.

A. The South African Regime's Unique Position

The South African regime is in a unique category: its constitution and laws transgress the basic truth that all people are created equal. To that truth--that veritas--this University has always been dedicated.

There are many issues, e.g. the manufacture of nuclear weapons, on which good people will disagree. Apartheid--to members of this University--is not such an issue. It is unique. Virtually all regard it as an offense against moral truth. Our response to apartheid therefore does not set a precedent. It seems to us unlikely that any other evil in the world could at present rally such uniquely universal abhorrence with in the University or require such a unique response.

B. The Best Response to Apartheid

The issue for Harvard therefore has been--and remains--not whether it will oppose apartheid, but how.

As to the how, there would seem to be only two possible responses by Harvard.

One response is for Harvard to stay invested in American companies in South Africa in the hope that by their implementation of the Sullivan Principles (or something similar) they will help ameliorate the conditions of the oppressed minorities there.

The other response (ours) begins by noting that less than 1% of the black work force of South Africa is employed by American companies. Even if Harvard could get all the companies in which it is invested in South Africa to implement the Sullivan (or similar) principles--something that we have never succeeded in doing--we would still "ameliorate" the lives of less than I percent of the black population. This short-term amelioration for a fractional few must be set against the support which the presence of American companies in South Africa provides to the regime. We know the critical importance which the South African regime attaches to the legitimizing support which the presence of American companies presently provides.

It should also be noted that, while U.S. firms employ less than 1 percent of the black work force in South Africa and account for only 17 percent of foreign investment there, they dominate several strategic sectors: energy, computers, motor vehicles, and mining. In a critical way, then, some of the U.S. firms in which Harvard is invested contribute directly to the support and perpetuation of apartheid.

C. Chances of Success