But determining the pros and cons—and crafting a responsible investment strategy in general—might be easier said than done. Among activists and experts alike, there are inconsistencies in the definition of “responsible” or “sustainable” when it comes to investment policy.

“To be a responsible investor requires transparency, accountability, and consideration of [extra-financial] factors when making investment decisions,” says Samuel F. Wohns ’14, one of RI’s founders and a Crimson magazine editor.

Graduate student and member of RI Justin A. Junge writes in an email he thinks a responsible investor should aim to “do no evil” and “attempt to do more good.”

But experts on responsible investing say the definition of what constitutes a responsible investment can vary from company to company. Steve Lydenberg, a senior research fellow at the Hauser Center’s Initiative for Responsible Investment, says that he prefers to think of responsible investing as “knowing an investment,” which involves “not only knowing the financial implications of an investment but knowing the social and environmental implications of an investment.”

The issue is further complicated by the fact that a company may invest in another company, which invests in another company. Peeling back the layers of an investment can be difficult, and as investors are shielded from potential ethical violations by several degrees of separation, the line of responsibility is increasingly blurred.

Although the standard used within the financial community is generally two degrees of separation, RI has not yet settled on a set policy, according to RI member Collin A. Rees ’12.

Eventually RI will be forced to define its standards, but doing so will require finding “something that works for Harvard,” Rees says.

The uncertainty about where to draw the line for Harvard may stem in part from a larger disagreement about the purpose of Harvard’s investments.

While RI sees socially responsible investing as a method of effecting social change, Mendillo looks at Harvard’s investments as a means of supporting the University’s primary educational mission. Mendillo says the potential for Harvard to impart social change lies less in its investments than it does in the areas supported by the returns generated from those investments.

“Harvard’s biggest impact is really through education and research and its financial aid policies,” Mendillo says. “Our job is producing strong long-term returns that allow Harvard to fulfill its important mission.”

CHECKS AND BALANCES

HMC says that the nature of their investment strategy, which prioritizes long-term returns, requires it to consider sustainable investing in its decisions already. In the process of conducting due diligence on its investments, HMC considers issues related to the environment, labor practices, and corporate governance because, according to Mendillo, “investments that fall short in any of these areas are unlikely to generate the strong long-term returns we require.”

“If there’s a concern...we are not going to be interested in the opportunity because we want an investment that we can sustainably grow for a long period of time,” Mendillo says.

HMC also stands by its policy not to invest in certain industries, including cigarette companies and the businesses that provide packaging and filters for tobacco products. Harvard has also promised to steer clear of PetroChina since its 2005 decision to divest from the company because of its connection to the Sudanese government.

But instead of non-investment or divestment, Harvard mainly relies on its power as a shareholder to influence companies’ practices through proxy voting. Two committees are charged with evaluating the companies’ proposals. This checks and balances systems was integrated into HMC’s money management system after the University came under fire in 1972 for its investments in Gulf Oil, which allegedly aided the Portuguese government in fighting rebels in Angola.