Swarthmore Students Vote to End Ethical Investing Ban

Referendum calls for social objectives to be factored into investment decisions.

Swarthmore College students this week voted overwhelmingly in favor of a referendum to reverse the school’s 27-year ban against considering social issues as part of the endowment’s investment decisions.

The referendum, which was introduced by climate activism student group Swarthmore Sunrise, passed with 87% in favor of removing the ban, with 40.7% of the student body voting.  It calls for the school’s board of managers to remove a clause from its investment guidelines requiring that the investment committee manage the endowment so as to “yield the best long-term financial results, rather than to pursue other social objectives.” The guideline was established in 1991, not long after the college had divested itself from South Africa over its racist apartheid policy.

The referendum makes two demands for the college’s board of managers: It insists a discussion of the repeal of the 1991 ban must be on the agenda for the next board meeting, which is scheduled for May 11 and May 12, and it says the ban must be replaced with a holistic investment policy that takes into account both long-term financial results and “Swarthmore’s commitment to social responsibility.”

According to Swarthmore campus newspaper The Phoenix, the board has historically not made policy changes from similar student initiatives. Last year, the student group also held a referendum calling for partial divestment from fossil fuels. Although 80.5% voted in favor of that referendum, the board decided not to divest. The paper said the last time the board fulfilled the terms of a student referendum was in 1994.

“What the school has told Sunrise for the past few years has been ‘oh, we can’t divest because we have this policy in place,’” Sunrise member Aru Shiney-Ajay ’20 told The Phoenix. “Our decision was, if that’s the reason we’re given, these are the terms we’re going to talk about.”

Sunrise leaders met with Swarthmore President Valerie Smith earlier this month prior to publicly introducing the referendum. Smith reportedly said during the meeting that she promised she would bring it up at the May board meeting if the referendum passed.

“We have been in contact with her since and have confirmed that she will personally present it to the board, though perhaps not necessarily express her opinion on it,” Sunrise member September Porras Payea wrote in an email to The Phoenix. “Ultimately the president of the college is hired by the board, so her influence is limited, but this is a big step in comparison to past conversations.”

Meanwhile, Greg Brown, Swarthmore’s vice president for finance and administration, opposed repealing the ban in an op-ed published in The Phoenix.

“Changing the investment policy to make a moral statement with no tangible effect could have the effect of diminishing performance and reducing funding available for critical mission-centric initiatives such as financial aid and academic programs,” Brown wrote.

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