Editors Note: The Regents comments prior to the vote are available at www.umich.edu/~urecord/9900/Jun19_00/20.htm, as is the text of a memo President Lcc C. Bollinger gave to the Regents and discussed at the meeting.
By Rebecca A. Doyle
The Board of Regents voted at the June 1516 meeting to divest the University of its holdings in tobacco manufacturing companies. Regents Laurence B. Deitch, Olivia P. Maynard, Rebecca McGowan and S. Martin Taylor voted in favor of the motion to divest; Regents David A. Brandon and Andrea Fischer Newman abstained; Regent Daniel D. Horning voted no; and Regent Katherine E. White was absent.
The decision follows the conclusion reached by the Ad Hoc Advisory Committee on Tobacco Investments, a committee of faculty, staff, students, alumni and friends of the University. The committee was established by President Lee C. Bollinger last September after several years of consideration of the issue across the University community. The committees recommendation urged the Regents to sell all of the Universitys currently owned shares of stock (and not to purchase any new shares) in companies that, either themselves or through their subsidiaries, manufacture significant quantities of cigarettes or other tobacco products.
Executive Vice President and Chief Financial Officer Robert Kasdin will instruct the Universitys investment managers to sell all relevant stocks within the next 10 months. The holdings represent less than one-quarter of a percent of the Universitys total holdings, and Kasdin says he is confident that divesting direct holdings of tobacco stocks would have essentially no effect on the riskiness and return of the Universitys investment portfolio. Determination of which companies manufacture tobacco products or have subsidiaries that do was made by consulting a list compiled by the Investor Responsibility Research Center, a not-for-profit organization that provides information for investors and institutions.
The move to divest was not an easy decision, despite overwhelming support for divestiture sent to the administration in e-mail and letters. Endowment investments generally should be based solely on financial factors such as risk and return, according to University policy, and activities of any company are not a relevant concern in that investment. In the end, the committee concluded that both tobacco and the tobacco companies activities are antithetical to the Universitys missions of research, teaching and service.
In divesting itself of the tobacco-related investments, the University of Michigan joins several other institutionsWayne State, Harvard and Northwestern universitiesand public pension funds in California, Florida, Maryland, Texas and New York.