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Board’s divestment policies under review in wake of criticism

At Stanford's homecoming football game, student activists unfurled a banner urging Stanford's divestment from companies associated with private prisons (Courtesy of Michael Ocon).

A recent Board of Trustees decision not to pressure or threaten divestment from firms that have business ties with private prisons has revived the debate on whether divestment is the right strategy for activists.

Historically, student causes such as Fossil Free Stanford (FFS) in 2016 and the anti-apartheid movement in 1977 have sought to capitalize on the University’s leverage as an investor to hurt corporations and political institutions that they oppose on moral grounds. SU Prison Divest, the student group behind the petition on prison divestment, had hoped that the Board of Trustees could convince the companies they invest in to cut ties with private prisons, which they say profit from a correctional system that relies too heavily on imprisonment and disproportionately affects marginalized groups such as ethnic minorities.

Although the Board rejected the two most recent divestment-related petitions from SU Prison Divest and FFS, questions that the student groups raised in the process have influenced the Board’s recent decision to review about Stanford’s Statement on Investment Responsibility (SIR), which guides its decisions on investment and divestment. In a response to SU Prison Divest explaining its rejection of the petition earlier this month, the Board announced that it would seek to clarify clarify “ambiguities” in the current criteria for divestment and the efficiency of the codified divestment process.

A feedback link where students and other Stanford affiliates may give input on SIR will be available for use later this month. Anticipating the review process, The Daily rounded up existing criticisms of SIR and student views.

 

Ambiguities

In their original requests to the Board, both SU Prison Divest and FFS claimed that the firms they listed caused social harm, which SIR states as possible grounds for a decision to divest. However, the Board differed in its interpretation of the term.

FFS member Spencer Slovic ’18 said that the Board’s decision to decline divestment from fossil fuels and private prison-linked companies based on such ambiguous language amounted to “[changing] their own rules” on what behavior merits divestment and what does not.

The relevant clause reads, “Where the Trustees conclude that a company’s activities or policies cause substantial social injury … the Trustees will consider the alternative of not continuing to exercise their shareholder rights under the foregoing paragraphs…”

On fossil fuel divestment, the Board ultimately decided to divest from companies involved in oil sands extraction – which Stanford owns no assets in – but to continue investing in other fossil fuel companies as it could not determine definitively that the broader fossil fuel industry’s social harm exceeded its social benefit.

Similarly, the Board declined the proposal from SU Prison Divest because it did not believe that the companies flagged for review caused social harm directly through their “activities and policies.” Their finding broke with a majority of Stanford’s faculty, student, staff and alumni on the Advisory Panel on Investment Responsibility and Licensing (APIRL), who voted that the four telephone companies and one food company under review for their role in providing inmates services to private prisons met the “social injury” criteria. APIRL had originally recommended that the Board gather more information on the five groups.

As it enters the SIR review process, which is expected to conclude next fall, the Board will not accept any new requests to review investments.

 

Doubts about divestment

Meanwhile, some students have suggested that divestment may simply not be the best option to effect social change.

“There are far better ways of spending your time,” Undergraduate Senator Chapman Caddell ’20 said. “Financially, divestment will hurt students more than the companies. The truth is you’re never going to make a big impact on that industry.”

Caddell added that the divestment had a primarily “symbolic value,” which he said must be weighed against the potential detriment divestment might cause for Stanford’s endowment.

According to Slovic, visibility and public awareness are key components of FFS. He said he hoped the campus movement achieved “ripple effect outwards from Stanford” despite the Board’s decision not to divest.

However, Slovic has also engaged with environmental issues in other ways, such as working on specific issues in climate change mitigation and prevention in addition to divestment activism. Meanwhile, Caddell has participated in carbon pricing programs with the Stanford Energy club.  

Whatever their stances on divestment, they agreed it is not the only strategy available – students can get involved in social change on campus in other ways.

 

Contact Elias Mooring at eliasm ‘at’ stanford.edu.

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