The University of Chicago and Princeton have carved out two opposite approaches to managing their Sudanese-linked investments, creating possible models as Harvard begins to examine its own policy on investing in companies accused of financing the genocide in Darfur.

Earlier this month, Chicago announced that despite nationwide divestment campaigns urging universities to sell off indirect holdings in companies tied to Sudan, it would maintain its investments. Princeton, however, said last week that it had devised methods to ensure that it had divested fully from Sudan, even pledging to monitor its indirect shares.

Neither Chicago nor Princeton holds direct stakes in Sudan-linked firms, but these differing approaches to indirect investments hold potential lessons for Harvard, which has maintained indirect holdings in Sudan-linked companies from which it had previously agreed to divest.

A Crimson report in January revealed that the University still maintained shares in the Chinese oil companies PetroChina and Sinopec. The shares are held through exchange-traded funds managed by Barclays, a British bank.

The University has said that Harvard’s policy of divesting from the companies “does not extend to investment vehicles over which the University does not exercise direct control over composition and investment decisions.”

Though Chicago and Princeton made different decisions on divestment, both laid out policies that encompass their indirect and direct investments—unlike Harvard, which has treated each type of investment differently.

As a subcommittee of Harvard’s Advisory Committee on Shareholder Responsibility—composed of faculty, students, and alumni—attempts to evaluate the school’s policy on indirect investments, it will weigh many of the same arguments that ultimately left Princeton and Chicago on divergent paths.

REJECTING DIVESTMENT

In making its case against divestment, Chicago said that “playing the role of a second-rate political force or influence” went against the school’s mission.

Chicago President Robert J. Zimmer, after receiving queries from Students Taking Action Now: Darfur (STAND), said last year that his school had only indirect holdings in Sudan-linked companies, though he has declined to say which companies the university had shares in and through which financial instruments it owned the shares.

After examining the holdings, Chicago’s board of trustees announced earlier this month that they would not sell Sudan-linked funds, citing the work of a 1967 committee guided by Chicago law professor Harry Kalven.

“The Board determined that it would not change its investment policy or its long-standing practice of not taking explicit positions on social and political issues that do not have a direct bearing on the University,” Zimmer said earlier this month.

Zimmer, who received his PhD from Harvard in 1975, added that the board had relied heavily on the principles articulated in the Kalven Report, which was produced to guide the university’s response to the Vietnam War. Zimmer said that there should be “a heavy presumption against” the university “modifying its corporate activities” for political aims.

STAND activists at Chicago responded heatedly to Zimmer’s announcement, citing Zimmer’s own support of divestment in 2005 as Brown’s provost and the fact that the Kalven report left room for “the exceptional instance [when] the corporate activities of the university may appear so incompatible with paramount social values.”

“The university is the first elite academic institution in the country to reject divestment, and the only institution to justify their complicity in genocide in moral terms,” Michael Pareles, STAND co-chair said. “Four hundred thousand people have died in the genocide in Darfur, but the University of Chicago Board of Trustees does not find that exceptional enough to change its investment policies.”

Chicago has long been resistant to calls for divestment. It was one of the few prominent American universities to not divest from companies linked to the South African government during apartheid.

FULLY DIVESTED

Princeton, on the other hand, decided to divest from both types of holdings. The school announced last June—well before divestment campaigns were focused on indirect holdings—that it would no longer invest “directly or indirectly [in companies] sponsoring, committing or allowing genocide” in Darfur.

Last week, the school said it had subscribed to a monthly service that flags companies that are tied to Sudan, according to The Daily Princetonian.

After Princeton’s governing body decided to divest the university’s holdings, its fund managers immediately determined that the university did not have any direct holdings in Sudan-linked companies, but that they might indirectly hold shares of PetroChina, Sinopec, the Russian oil firm Tatneft, the Swiss power company ABB Ltd., and the state-owned Indian firm Bharat Heavy Electricals.

Princeton directed its fund managers to look into its investments in an Indian subsidiary tied to ABB, but eventually determined that the subsidiary had no part in ABB’s Sudan activities.

The university also looked into its holdings in Tatneft, finding that the company did have a role in an oil-for-arms transaction with the Sudanese government but that it was no longer involve in such activities.

Princeton STAND activists praised the university’s decision, saying they are “pleased that the University had decided to divest from the government of Sudan, because it does help to send a signal that the University recognizes that atrocities are being committed in Darfur,” according to the Princetonian.

—Staff writer Paras D. Bhayani can be reached at pbhayani@fas.harvard.edu.