A reconstituted committee advising the university on investment policy met for the first time last week with a charge to identify a path by which Duke can use its investments to serve the values of socially responsible investing while growing the university's resources.
Chaired by law professor James D. Cox, an internationally known scholar on investment ethics and responsibility, the Advisory Committee on Investment Responsibility (ACIR) will report to President Richard H. Brodhead on approaches for socially responsible investing.
At the first 1-1/2 hour meeting last week, Brodhead gave a general charge to the committee, asking it to do more than react to controversial social issues.
"The bottom line is, in the past our policies have been reactive," Cox said. "When an issue comes up -- South Africa, Sudan -- people want an answer and we set a policy. But the president asked us to be proactive and positive.
"Everything this investment committee does should reflect the university's situation. We are a high-quality teaching and research institution. The issues we are dealing with transcend investment policies. As an entity, Duke is engaged with the issues of our time, whether it is climate change or economic development in a country, and the president wants us to develop investment strategies that reflect that."
Brodhead asked the panel to focus on three immediate tasks:
- Develop and make public revised and streamlined procedures for members of the Duke community to bring questions and issues forward for the committee's consideration;
- Develop a public website to support and communicate Duke's commitment to socially responsible investment; and
- Consider the proposal by Divest Duke to immediately freeze any new investment in fossil-fuel companies, and to divest within five years from direct ownership and from any commingled funds that include fossil-fuel public equities and corporate bonds. The committee should also explore other options beyond full divestment.
The revised ACIR panel was among several changes related to Duke's endowment investment policy that came about after months of consultation among faculty members and members of the executive committee of the Board of Trustees, the executive committee of the Academic Council, and the University Priorities Committee, as well as experts in finance and investments. The changes cover Duke University's endowment and do not affect The Duke Endowment, a separate private foundation based in Charlotte, whose investments are also managed by DUMAC.
The committee was reconstituted this past October with four additional members -- one trustee, one faculty members and one undergraduate and graduate student -- added to its original 12 member panel. Brodhead serves as an ex-officio member.
The new policies come at a time when students, faculty and other members of the Duke community have raised questions about the transparency of Duke's investment of its $6 billion endowment and when many universities across the nation have faced questions about their investments in controversial industries or countries.
Cox said the committee will look at a variety of approaches to responding to controversial investments. Divestment will be considered, but Cox said "we will also consider whether there are more effective alternatives to reach the same objectives shared by the Duke community."
"In our explorations of alternatives, we can expect to gain insight on investment transparency," Cox added, taking into consideration both the desire of endowment managers for confidentiality and the interest of campus community members to have free and public discussion of university investments.
ACIR will establish a public website for comments and discussion, Cox said. E-mails and direct communication with committee members are also welcome. (See committee membership below.)
Cox said the committee has started quickly "but because of the sensitive and complex nature of the issues, we necessarily will be deliberate in our work." He said he was aiming to provide President Brodhead with a framework by April. A final report is due to the president by Dec. 1, 2014.
Duke formally adopted guidelines on socially responsible investing in 2004. The new policy noted that while the university's primary fiduciary responsibility is to maximize the financial return on its resources, it could take ethical factors into account when setting investment policies and practices.
Duke has responded to student concerns since then. In 2008, it ceased investing in companies doing significant business in Sudan/Darfur. In 2012, the university adopted proxy voting guidelines for investments in companies that might be connected to conflict minerals.
ACIR Membership
Faculty
Jim Cox (Law School), chair 2015
John Graham (Fuqua School of Business), 2014
Ruth Grant (Political Science, Philosophy, Kenan Institute for Ethics) 2015
Frederick (Fritz) Mayer (Sanford School of Public Policy) 2015
Student representatives
Stefani Jones, DSG, 2014
Casey Williams, DSG, 2014
Shanna Lehrman, GPSC, 2014
Nathan Robertson, GPSC, 2015
Alumni representative
Laura Meyer Wellman, 2014
Trustee representative
Jeffrey Howard, 2015
Administrators
Scott Gibson, Executive Vice Dean for Administration for the School of Medicine
Tracy Futhey, Vice President for IT & Chief Information Officer
Ex officio
Ralph McCaughan, Associate University Counsel
Tori Nevois, Assistant VP & Deputy Treasurer