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Investment Responsibility at Stanford

A Brief History

In 1971, the Stanford Board of Trustees became the first governing body of a major academic institution to adopt a statement on investment responsibility, according to A Chronology of Stanford University and its Founders by Karen Bartholomew, Claude Brinegar and Roxanne Nilan. In their 2001 publication, published by the Stanford Historical Society, the authors write that the statement says, “that in the majority of cases, obtaining maximum financial return is the board’s primary fiduciary duty. But ‘independent consideration and weight’ will be given on an individual basis in those cases where ‘the undesirable social, economic and political acts of the company involved are direct and substantial.’ A month later, the board urges General Motors to try to improve conditions for nonwhites in South Africa. In 1978, the board revises its policy: while maximum financial return is still the primary goal, in cases where a company’s activities or policies ‘cause social injury,’ the board should favor shareholder proposals that would ‘eliminate or materially reduce’ this harm. Divestment will be considered as a last result, according to the new policy.” In 1971, the trustees created the Commission on Investment Responsibility (CIR), later renamed the Advisory Panel on Investment Responsibility (APIR). The trustee’s own Special Committee on Investment Responsibility (SCIR) was created in 1977 in response to increased debate on campus and nationwide regarding South African investments.

Human Rights

For more than four decades, Stanford has addressed endowment-related human rights issues around the world from South Africa in the 1970s through 1993, to Nigeria and Burma in the 1980s and 1990s, and more recently in the Darfur region of Sudan. Allegations of substantial social injury presented to APIR have been thoroughly researched and vetted. When APIR determined that evidence supported the allegation, it forwarded recommended actions to SCIR. In cases where SCIR determined there was sufficient reason to implement APIR recommendations, the case was presented to the full Board of Trustees for a final determination. Recommended actions have included proxy voting, engagement, disinvestment and divestment.

Diversity and Nondiscrimination

In 1994, after thorough research and review, Stanford adopted a policy and proxy voting guideline supporting proxy resolutions that ask companies to implement and report on corporate affirmative action policies.

Environment

As a result of the Exxon Valdez spill in 1989, APIR began addressing environmental issues. The university has been voting proxies that support endorsement and reporting on compliance with environmental standards and has also engaged companies on global climate change since 1998.

Tobacco and Alcohol

Throughout the 1990s, investment responsibility discussions focused on the health risks, as well as marketing and sale, of both tobacco and alcohol to minors. Over a period of eight years, Stanford implemented several proxy voting guidelines and eventually eliminated holdings in core tobacco companies due to adverse market conditions.