Shareholder's Discuss Environment

The Harvard Corporation Committee on Shareholder Responsibility (CCSR) yesterday released its 1998-99 annual report.

The document explained the CCSR's decisions for voting Harvard-owned shares on 99 company proposals "dealing with issues of social responsibility addressed to corporations whose securities are owned by Harvard."

Thirty of the proposals dealt with the environment, seven with labor practices and two with the tobacco industry.

The report also discussed proposals relating to diversity and equality in employment, nuclear power, military contracts, political action committees, executive compensation and doing business in countries with histories of human rights abuses.

"I think this was a year of business as usual," said Joseph L. Badaracco Jr., last year's chair of the University's Advisory Committee on Shareholder Responsibility (ACSR).

"There were some new aspects of old issues.... We addressed them and started a dialogue with the CCSR about them," added Badarucco, the Shad Professor of Business Ethics at Harvard Business School.

The CCSR and ASCR work together to ensure that Harvard applies its policies consistently in shareholder voting.

The CCSR, acting for the President and Fellows of the University, decides how Harvard votes its shares. The ACSR, composed of faculty, students and alumni, makes recommendations to the CCSR on selected proposals. The report includes the findings of both committees.

Of the 86 proposals that the CCSR and ACSR both considered, they agreed on 50 and disagreed on four. The remainder involved some sort of split.

Tobacco

In 1990, the University adopted a policy prohibiting stock purchases in companies producing significant amounts of tobacco products. Harvard also sold a number of tobacco industry holdings.

Harvard recently began taking a more aggressive approach to tobacco issues, according to John D. Donahue, the Raymond Bernon Lecturer in Public Policy at the Kennedy School of Government and an ACSR member last year.

Donahue recalled one tobacco-related issue that was slightly more controversial. One shareholder proposal asked the company H.B. Fuller, which makes glue, to stop selling its product to cigarette companies.

ACSR recommended that Harvard vote in favor of the proposal, but the CCSR followed its precedent and abstained.

"H.B. Fuller, I thought, was kind of pushing the envelope," Donahue said. "Our thinking was that Harvard ought to take a fairly strong anti-tobacco stance, just as in previous years it as adopted an anti-alcohol stance."

Although the CCSR abstained, it "wrote a letter to the company explaining Harvard's policy against tobacco holdings," the report reads.

Badaracco said he thinks the committee is moving towards a "common understanding on to how to draw a boundary around tobacco activities."

"The original boundary was drawn around cigarette manufacturers, but then there's the H.B. Fuller-type cases," he said. "My guess is that this year the committee might be able to specify some criteria [to decide similar issues]."

Ali Ahsan '99, also a member of last year's ACSR, said it is difficult to draw a line.

"There's a slippery slope argument," he said. "If the ASCR sticks to this point it's possible CCSR might redraw the line. It could take a couple of years."

Labor

International labor standards were also a subject of discussion for the committees. In recent years, labor issues have gained prominence on college campuses.

"I think that the whole [ACSR] committee has been pretty strong on anti-sweatshop standards," said Donahue.

"Sometimes there might have been a 'no' vote on a specific proposal, but often that would be because the proposal would be badly worded or premature, presuming the failure of the ongoing coalition effort," he said, referring to a joint effort between the White House and private industry attempting to set up codes of conduct.

Ahsan said the committee considered student input on this issue.

"There was some effort from proactive student groups," he said.

Environment

Badaracco said the ACSR also spent a considerable amount of time on environmental issues. Much of the discussion centered on proposals that asked companies to adopt the corporate code of conduct established by the Coalition for Environmentally Responsible Economies (Ceres).

Badaracco was among the supporters of the principles, but he said Ceres's shift in focus and the decline in participating companies were both concerns.

"It might be useful to have some set of common reporting standards so that everybody on the outside could compare how companies are doing, but to have this happen a lot of companies have to sign up," he said.