Social screens bar BC investment in Sudan

On this point, students and administrators concur: As a Catholic and Jesuit institution committed to social responsibility, Boston College holds a special obligation to make sure its investments reflect its values.

But the agreements end here. While administrators point to the implementation of various social screens to ensure socially responsible investing, as per BC's investment policy, students within the Global Justice Project (GJP) and BC Divest Darfur movement contend that the policy and screens employed do not reach far enough.

The policy, available online, requires that BC's $1.6 billion endowment "be handled in accordance with the [ethical, social, and moral] principles," which provide the foundation for the University. BC periodically reviews its holdings to "ascertain whether the firms [in which it invests] engage in practices or procedures opposed to the ethical, social, and moral principles deriving from BC's heritage," according to the policy.

As conflicts in the Sudan, especially Darfur, escalated into state-sponsored genocide, BC identified five companies operating in that region and restricted investment in these companies. During the summer of 2006, BC classified Sinopec, Nam Fatt, Oil and Natural Gas Corporation, PetroChina, and Tatneft as companies in conflict with its investment policy.

"What we've done is established a policy for specific companies that operate in the Sudan, so we've prohibited future investment in these five companies," said John Zona, assistant treasurer and associate director of investments.

To identify companies that might possibly conflict with the socially responsible investment policy, BC employs an independent consulting firm called Institutional Shareholder Services (ISS). According to Zona, this firm maintains a reputation for expertise in the field of socially responsible investing. Research and social screens conducted by ISS inform BC's investment management.

"We wanted to look at companies with significant oil operations in the Sudan, and once [ISS] came back with a list of names, we had to systematically try to review our holdings to see if we did invest in them," said Zona. "In fact, we did not." BC did not need to divest from those companies because it did not invest in them in the first place.

"The social screens we put in place had worked," said University Spokesman Jack Dunn. "They had precluded our investment in certain companies whose activities are inconsistent with our values as a Jesuit Catholic university, and ISS has identified companies that we have instructed our fund managers never to invest in."

But while those five companies will not receive future capital from BC, Stephanie Andrews, involved in the BC Divest Darfur movement and A&S '08, said that the restrictions should be extended to more companies. Citing from a list compiled by the Sudan Divestment Task Force and corroborated by analysis from the investment management firm Calvert, Andrews identified at least 15 other companies.

Nick Salter, member of the GJP and A&S '07, said these other companies have their hands in offenses just as grievous as the five restricted by BC. "The social screen on Darfur is a loose one," he said. "By mentioning these five companies, BC is acknowledging that its investments could be doing harm. They should consider adding other oil companies to those five."

Zona plans to meet with Salter and Andrews tomorrow to discuss policy specific to the Sudan. According to Dunn, the additional research brought forth by Salter and Andrews would be taken into consideration. "No one is opposed to taking researched information and running it by our managers," he said.

Zona said the decision to restrict against investing in a certain company is made only in cases where a "clear and unambiguous" conflict exists with BC's values as an institution. "We consider policy to restrict or prohibit investments only rarely, when the evidence is clear and unambiguous. The situation in Sudan fits this profile, as genocide continues to occur that is sponsored by the government," he said. "If you look at oil revenues, it is a major source of income for the government, which funds military operations."

BC's investments are controlled by a hierarchical structure that ensures diversity and dispersion of its multi-billion dollar assets. The Investment and Endowment Committee, on which eight people sit, oversees the implementation of BC's policy through the hiring of fund managers and the dissemination of assets. Financial giants Peter Lynch and Mario Gabelli serve on BC's Investment and Endowment Committee.

According to Zona, BC employs approximately 75 independent management firms that each have a separate mandate. Each firm invests in thousands of different securities, resulting in an extremely diverse portfolio. "We have lots of complex strategies across domestic equities, international equities, emerging markets, private equities, venture capital, hedge funds, and a myriad of asset classes," said Zona. "The firms allocate capital accordingly across these classes."

The funds in which BC invests include many components, resulting in thousands of individual companies in the University's portfolio. "Some companies we hold directly, and some we hold indirectly through commingled funds or hedge fund accounts," said Zona.

But even in its indirectly controlled holdings, like mutual funds, BC does not invest in the five identified oil companies. "The social screens preclude investment in any form," said Dunn. "We value the information provided by ISS, and our investors use this company to review social screens that are set in place to make sure investments are consistent with our values as a Catholic university."

The social screens essentially act as filters, assessing companies based on criteria established by ISS. They can be formatted to focus on specific issues, from environmental affairs to workplace policies, and BC uses this information to further examine the ways in which companies operate.