Reforming From Within?

EVERY SPRING at Harvard for the past decade, a number of Harvard students--the exact number depends on the year--has taken to the streets in protest of Harvard's investments in American companies doing business in South Africa.

And every spring, Harvard administrators have repeated their arguments for why Harvard will not divest. This fall at a South House dinner, for example, President Bok clearly stated his position on the matter once again: that Harvard best serves its moral obligations by working within a company to change its policies, rather than by cutting all ties and thus moral persuasion with them.

While this yearly deadlock shows no signs of subsiding, campus attention has recently been thrust upon another aspect of the perennial debate over Harvard's more than $400 million worth of stock in companies operating in South Africa. The question that is being increasingly asked is whether Harvard really can use its influence to foster positive change in the apartheid state. The focus of this debate is on the so-called "Sullivan Principles," a set of equal opportunity and labor standards for companies operating in the country.

The ties of American companies to South Africa has been one of the most hotly debated topics on college campuses in the last decade. Students and activists have charged that American universities are tacitly supporting apartheid by investing in businesses having South African connections.

Harvard's policy has always been that it wants the companies it invests in to maintain reasonable ethical standards. The University has used the Sullilvan Principles as a standard for such behavior since 1978. Recently, however, this sort of reliance on the principles has come under fire from campus groups informed on the South African issue.

Part of this is because of nationwide trends. Currently, a bill has passed the House that would, among other things, force all American companies doing business in South Africa to sign and abide by the Sullivan Principles. At Harvard, the longstanding student-faculty-alumni committee that examines shareholder issues for the governing Corporation took the unprecedented step last spring of recommending that Harvard use the Sullivan Principles as a minimum standard for holding stock in corporations that do business in South Africa.

Harvard's governing Corporation has taken this advice of the Advisory Committee on Shareholder Responsibility--at least partially. It has said it will engage in an "intensive dialogue" with three of nine companies in Harvard's investment portfolio that have been found deficient according to the principles. During the next 18 months, Harvard will use its influence to try to persuade the companies to use their economic position in the South African economy to advance the interests of Black South Africans, a Corporation spokesman has said.

All these developments have brought to the fore controversy surrounding the principles, which were first developed in 1977 and since refined by the Rev. Leon Sullivan, a Philadelphia minister and board member of the GM company. The general intent behind the principles is to help Black South Africans economically by making sure companies follow certain fair-labor practices.

Supporters say the principles are an effective measure of the willingness of American companies to work for progressive change in South Africa, Critics--many of whom have been in the movement to force universities to divest their South Africa stock--charge that the principles have not produced any real change in the condition of Blacks, and they have instead served to deflect attacks on the South African state.

THE RELEASE last fall of the seventh annual report on the Sullivan Principles has intensified this long-standing debate. The Arthur D. Little Co., a Cambridge consulting firm, compiles a yearly survey on the compliance of companies who have signed the principles. The main tenets of the principles include: making sure all workplace areas are desegregated; providing medical, pension, and insurance plans for all employees; providing equal pay for equal work; contributing money for community development and training nonwhite workers for management-level positions.

The results of the monitoring program this year are fairly typical, according to D. Reid Weedon Jr., a senior vice president at the consulting firm. "Within the companies that have signed the principles, something less than one-third are making what we would call 'good progress,'" he says. "About one-third are making some progress and getting by. The ones in the bottom groups really aren't putting their shoulder to the wheel." About 100 signatory companies are included in the report; 11 did not report their figures, Weedon says. About 160 American companies in the country have not signed the principles at all. Among the companies in the bottom group are the three Harvard will be contacting in the next year.

Whether this progress actually means something depends on who you talk to. Weedon says that by and large American companies have proved strong on issues relating to the workplace. For instance, according to the new report, all of the companies have desegregated their facilities and their Black employees are found to be receiving higher average pay increases than their white counterparts. Still, Weedon admits that progress in other areas has been slower--especially in corporate involvement with community development. Most importantly, Weedon says, there has been a noticeable failure in companies' efforts to put Blacks in supervisory positions. Blacks, for instance, represent 63 percent of the signatory companies' workforces, but only .007 percent are in positions in which they supervise whites. It is these statistics that critics of the Sullivan Principles cite when they claim the principles have contributed little to fundamental change in South Africa.

"I think that they're really a cover-up for doing nothing at the levels where they really mean anything," says Bishop Trevor Huddleston, a leader of the anti-apartheid movement, director at the International Defense and Aid Fund (IDAF) and South African resident. The IDAF provides legal aid to South Africans challenging the legality of elements of the apartheid system. Timothy R. Smith, the executive director of the Interfaith Center on Corporate Responsibility, which coordinates $8 billion in investments held by a group of American churches, adds. "It is clear that over the past year the presence of American companies hasn't helped the South African situation. It has actually deteriorated. Blacks still do not have the vote and cannot criticize the government."

"All the charitable contributions the companies want to make don't address [these] real issues," Smith adds. "I think they [the Sullivan principles] are used in a manipulative way by corporations like Citibank, IBM, and Mobil to deflect the real criticisms about the way their presence in South Africa helps support apartheid."

Some Harvard observers agree. "The Sullivan Principles are not changing anything fundamental in South Africa. They affect only the small minority that work in American companies," Claude Convisser '84, the undergraduate representative to the ACSR, said this week. Convisser pointed to South African spending on education, which is 14 to 15 times higher for white children than for nonwhite, as indicative of the broad discrimination that he claims the principles do nothing to alleviate. "They provide a cover for continued tacit American support of the South African government," he added.

NOT ALL observers reject the Sullivan principles as useless. Those who maintain that the principles have been effective in promoting some change fall generally into two groups. One group believes that the principles as they are presently applied have done all that can be expected of their limited purview. Further change, this group maintains, depends on a radical reformation of the principles and an expansion of their goals. The second group believes that further progress can be achieved in South Africa without changing the principles.

Rev. Sullivan himself is in the first group "Equal pay for equal work must be translated into reality through the recognition of free Black trade unions so we can empower millions of Black workers," Sullivan says. "There must be massive resources dedicated to Black education. Personal freedom, to live and work where they [Blacks] want must be achieved."

To achieve the goals he outlines, Sullivan proposes that his principles be made mandatory for American companies operating in South Africa and that heavy penalties be imposed against compliance that do not receive the most favorable compliance ratings. Investors should divest from companies that consistently fail to get acceptance compliance ratings, the minister said Sullivan said he seeks to have 1000 companies endorse the principles.

Universities should take a more active role in producing change in South Africa, Sullivan adds. "Harvard has not been doing its job. If they are really going to use their resources to help, they should use their resources to divest from companies that have not signed."

In terms of what has been accomplished thus far, however, proponents of the principles say they have done about as much as can be expected.

"I feel the principles have given some help in the overall situation in South Africa," says Allen M. Mayes, an official with the General Board of Pensions for the United Methodist Church. The Board of Pensions supervises investment of $1.3 billion in Methodist pension funds. Mayes, the secretary of the church's Committee on Corporate and Fiduciary Responsibility, ensures that investments match the ethical principles of the church. "They are the best tool we have [to promote reform]; they are the only tools we have," he says.

"The Sullivan principles have had a substantial effect on conditions in the workplace," says Weedon. "The Sullivan companies are really leading the parade for reform down there. They are one of the things that will help erode apartheid."

As an example of the effectiveness of U.S. companies, he cites a recent court victory in South Africa that makes it substantially less difficult for Black to live where they work Legal support for the defendant in the case was provided by the South African Legal Resources Center, a private legal aid foundation supported by many signatory companies.

Despite all the arguments for the Sullivan principles, however, activists remain unconvinced believe that the only effective means of bringing apartheid to its knees is complete financial dissolution.

"The Sullivan principles are a shameful compromise born out of a push for divestiture," said Kenneth Carstens, fellow at the Center for International Affairs, leader of an Institute of Politics Discussion Group on South Africa and South African politician. "The South African government supports the principles, and they're not going to support them if they're not good for apartheid Carstens adds.