Organization theory posits that when a group no longer has a reason to exist, constituents of that organization will find new purposes for it to pursue. If this is the case, then it is high time for the body of Brown's Advisory Committee on Corporate Responsibility in Investment Policies, or ACCRIP, to review its mandate and consider finding something new to do with itself.
Though ACCRIP and its predecessors have existed since 1978, the last two years have seen a marked decline in the accomplishments of this group. ACCRIP is mandated by its charter to accomplish two main tasks: to recommend courses of action on moral issues regarding Brown's investments and to hold proxy votes on shareholder resolutions. The last time ACCRIP exercised the first right was in April 2009, when it decided to ask President Simmons to write a letter expressing her concerns about possible labor rights abuses at HEI hotels, a private equity company in which Brown invests. As for the second right, ACCRIP has not voted on a single proxy resolution in two years.
Prior to 2008, ACCRIP received proxy resolutions from Brown's Investment Office whenever a moral issue was brought up in a shareholder resolution, such as whether or not a company should conduct an environmental impact survey. These shareholder resolutions were sent to the University every year by the companies in which Brown was invested.
And then one day they just stopped coming. Purportedly as a response to the financial crisis, the University liquidated all of its direct holdings of publicly traded stock, which previously amounted to nearly ten percent of the endowment's value. In the years since, not only has Brown not reinvested in direct holdings, but it has dropped its subscription to a service that it once used to gather information on shareholder resolutions. Clearly decision makers on the Corporation's Investment Committee have no immediate plans to reinvest in direct holdings, but rather intend to continue investing in commingled funds and other asset classes.
This development is significant because it makes the role of ACCRIP and the future of socially responsible investment policy at this school unclear. To claim, as Brown did on this year's College Sustainability Report Card (an independent survey of sustainability at American colleges and universities), that Brown's ACCRIP "makes recommendations on proxy voting for environmental and social resolutions" in the present tense is somewhat disingenuous. Brown scored an "A" for its investment policy on the report card, but at least partly for a mechanism that does not function.
So what can be done to improve this situation? The decision to buy stock as direct holdings again lies with Corporation members, whose rationale for not doing so is inscrutable. But does this mean that ACCRIP should be resigned to a new, limited mandate? Should ACCRIP remain as a vestige of a time when Brown's fiduciary responsibilities were subject to its ethical standards, conveniently visible so that it could be touted in every College Sustainability Report Card as an example of Brown's progressive policies? Or, as Haley Kossek '13 suggested is the case in her guest column ("A call for investment integrity," Oct. 27), should it continue as nothing but a forum to which student activists concerned about investment ethics may endlessly be directed and redirected?
ACCRIP should not be limited to the possibilities above. The wake of the financial crisis of 2007-2008 presents an opportunity for a group like ACCRIP to investigate and constructively critique investment policy as has not been done before.
The management policies toward which Brown is leaning have lost us hundreds of millions. In the recovery since then, it is now apparent that it is public equity holdings, and not the inherently non-transparent hedge funds and mutual funds, that have had the best returns. Perhaps now is the time to think about returning to direct holdings with which Brown can be a social and environmental activist shareholder, by voting on resolutions and maybe even (gasp!) letting ACCRIP write its own.
For most of the history of the endowment, asset classes like hedged strategies, which now dominate Brown's portfolio, were not to be found. Returning to a focus on direct holdings in publicly traded equities would not be a radical departure, but rather a return to tradition that could guarantee the utility of a group like ACCRIP. For the University and for the sake of our consciences, not to mention keeping the good people of ACCRIP busy, it is time to recognize that for our investments, simpler may be better.
Ian Trupin '13 is concentrating in
commerce, organizations and
entrepreneurship. He can be
reached at Ian_Trupin (at) brown.edu.
