Students debate divestment

Should the Pitt bear ethical considerations in mind when trying to make financial investments… Should the Pitt bear ethical considerations in mind when trying to make financial investments for its future?

The William Pitt Debating Union hosted a debate on this question last night in Alumni Hall and addressed the need for moral responsibility when investing university endowment funds.

All debaters agreed that ethics should influence investment, but many disagreed about precisely how and to what extent.

The University receives private donations in the form of endowments. The Board of Trustees then invests these endowment funds into private corporations with the hopes of maximizing profit returns. These returns on investments are what fund all university expenditures, including professor salaries, scholarships, grants and research.

But what if the University profits from investment in a company that manufactures weapons for the genocidal government of Sudan? Is this morally reprehensible? What about investment in cigarette companies, which indirectly cause the deaths of millions of Americans every year?

The debate centered on the question, “Should Universities adopt the Duke guidelines for socially responsible investing?”

Duke University has recently adopted a set of guidelines for its Board of Trustees that encourages an ethical evaluation of the Board’s investments. If a specially appointed committee finds that the Board is investing in a company that causes social harm, the university can apply pressure on that company by exercising its shareholder rights.

If the company doesn’t change its activities, then the Board has the option of pulling out its investments, a process called “divesting.”

“I believe that these measures should be adopted by all universities,” said student debater Lissa Geiger, speaking of Duke University’s new policies. “Divestment can send a symbolic message to governments.”

In response to Geiger, student debater Paul Masters argued, “Nice-sounding concepts don’t always work.” He also spoke of the bureaucratic red-tape that these regulatory measures spawn, saying, “Slapping a set of guidelines on these investments just makes them less competitive.”

Also at issue was whether or not a set of guidelines should decide for us what is right and what is wrong. “The idea of social responsibility is pretty much ambiguous,” said Masters, implying that many social issues are too complex to take a definitive moral stance on.

Jay Sukits, a guest speaker from Pitt’s College of Business Administration, gave some examples to illustrate Masters’ point.

He said that investors might think they are innocently investing in the Hilton Hotel company, but a closer investigation would reveal the moral quandary that the Hilton company is one of the largest sellers of pornography in the nation.

Similarly, investors who divest their money away from a country embroiled in a civil war (such as Sudan) may actually be hurting the side they want to help by pushing an already unstable economic situation over the edge. Poor and unemployed people are more likely to start violence.

Sukits proclaimed his belief in the need for Boards of Trustees to adopt ethical guidelines, but said, “The Duke guidelines are too weak.” He complained that under Duke’s system, “Most of the issues are looked at on a broad brush basis,” and that the guidelines were “reactive and not proactive.”

Michael Goodhart, guest speaker from Pitt’s Department of political science, argued, “the value of guidelines is precisely in gray areas.” He eventually agreed with Sukits that the Duke guidelines are not perfect and need to be changed, but he expressed a strong belief in the safeguards that guidelines provide.

In response to the contention that investors don’t need guidelines because they are reasonable people to begin with, Goodhart said, “It’s not clear to me that history shows that investors always do the right thing.”