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Cedar Rapids - The Gazette: Article on Divestment
Students urge UI to invest in socially responsible funds
By Tom Owen
Sunday, November 21, 2004, 9:57:50 AM
IOWA CITY -- Two University of Iowa students are urging the UI to shift some stock investments to "socially responsible" funds. "We hope it will be a hot issue within the administration, and something that students mobilize behind," said Ethan Grundberg, who is pursuing the change with Chad Aldeman, a fellow member of the UI Green Party.
Grundberg and Aldeman hope to persuade UI administrators and the state Board of Regents to immediately divert $500,000 of the UI's stock investments to socially responsible funds, such as the Parnassus Equity Income Fund or the Citizens Emerging Growth Fund.
The two also want the UI to enact a new socially responsible investment policy by January 2006. The policy would mandate that at "least 5 percent of all UI investments should be in socially responsible mutual funds."
Socially responsible investment funds have been gaining in popularity since the 1980s.
Such funds don't buy shares in companies the funds deem objectionable, with the criteria varying by fund. They often focus on issues such as wages or working conditions, discrimination or environmental violations.
Iowa's public universities have investment portfolios they use to generate operating funds.
According to a report to the regents in September, the UI had $133 million of its $572 million portfolio in stocks or mutual funds, with the rest in more conservative investments such as corporate bonds or Treasury bills.
That money is separate from the UI Foundation's endowment of about $480 million. The foundation has stock market investments totaling $418 million, according to Tiffani Shaw, the foundation's chief financial officer.
Grundberg and Aldeman said they would consider raising the issue of diverting some foundation funds to socially responsible investments as well.
But for now the juniors from West Des Moines are focusing only on the UI funds.
In particular, they question some stock holdings of one Vanguard fund, in which the UI has about $90 million invested.
It includes such large companies as Home Depot, which paid $5.5 million to the federal government in August to settle a complaint that the company unfairly denied women promotions and paid them less than men; Wal-Mart, which faces a class-action suit by up to 1.6 million women claiming discrimination; and ExxonMobil, which announced upon the 1999 merger of Exxon and Mobil that it would discontinue Mobil's policy of banning discrimination based on sexual orientation.
The Board of Regents would have to approve any change in UI's investment approach.
Regent David Neil of La Porte City, chairman of the regents investment committee, said the students should bring the issue to the UI Student Government for a resolution rather than directly to the regents.
Grundberg and Aldeman said they hoped UI President David Skorton would make their case to the regents.
The two have been contacting student groups on campus, urging them to write letters to Skorton supporting the investment strategy. During the past week, by their calculation, at least 30 student groups sent letters.
Grundberg and Aldeman said they met with Skorton about a month ago to outline their proposal.
The UI Green Party's proposal will get consideration and a fair discussion, said Doug True, UI vice president for finance and operations.
True noted that student efforts have achieved results in the past. In the 1980s, student outcry over apartheid South Africa initiated passage of a state law restricting university investments in South African companies engaging in racist practices, True said.
The UI has a code of conduct governing the hundreds of licensing contracts it has with manufacturers. The code, prompted by protests in spring 2000 by Students Against Sweatshops, requires companies and their subcontractors to pay employees enough to meet basic human needs, pay overtime, not employ anyone under age 15 and allow workers to unionize.
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