ACSR Report Is Substantial Policy Shift

The recommendation issued yesterday by the Advisory Committee on Shareholder Responsibility (ACSR) that Harvard divest its holdings in companies operating in South Africa or, failing that, make broad changes in its investment policies represents a substantial realignment of the committee's conception of Harvard's responsibilities as an investor in the apartheid state.

Prior to the report, the ACSR held that Harvard could essentially confine its attention to reforms in the workplace of companies operating in South Africa. The committee accepted lengthy schedules for implementation of reform and recommended divestiture as a rare measure to be used only in desperate cases.

It now appears that the committee, frustrated by the continuation of apartheid in South Africa, desires a more active stance from Harvard. The recommendation for divestiture, though approved only by a small (6-5) plurality, is the most radical statement yet from the 12-member committee.

The general reforms, approved 11 votes to none, call for direct corporate involvement in South Africa policies, strict time limits on corporate implementation of Harvard's demands, and a stated University policy of divestiture from companies that are unable to implement desired practices within the time allotted.

One member of the advisory committee abstained on each vote.

The ACSR is a standing committee formed in 1972 to advise the seven-man Harvard Corporation on ethical investment policy. There are four student representatives to the committee, one from the College and three from graduate schools, four faculty representatives and four alumni representatives.

The Corporation has final authority on all investment decisions.

The last major ACSR statement on University investment in South Africa came in 1978. In that statement, the committee called for the University to concentrate its efforts on persuading companies in which it invests to abide by the Sullivan Principles, minimal guidelines for ensuring that non-white workers in American companies are not discriminated against.

Harvard accepted many of the 1978 suggestions. Under current policy, the University will divest from companies that do business in South Africa only if they refuse to adopt and work to fulfill the Sullivan Principles or similar guidelines, if repeated efforts to persuade them to do so have failed and if there is no hope for improvement in work-place conditions for non-whites.

The University has not divested from any companies under these guidelines since they were adopted. Harvard currently has holdings worth around $430 million in 29 companies that do business in South Africa. Five of the companies have not fully complied with the requirement to endorse the principles.

Tutu Principles

Wednesday's report calls for strengthening the Sullivan Principles. More significantly, however, it urges the Corporation to establish the Tutu Resolutions, a substantially broader set of standards for corporate behavior, as a concomitant requirement.

Instead of concentrating exclusively on the workplace, the Tutu Principles require corporations to "work actively against influx control laws," permit unionization by Black workers, and make "massive investments" in educational and training programs for non-white South Africans.

"Incremental improvements in the work-place really aren't the issue. If you want to change the South African system you have to work through legislative activity," Professor of Engineering and Applied Mathematics Myron Fiering, an ACSR faculty representative, said after the report was released.

The committee's recommendation to Harvard to demand of the companies it invests in is a dramatic step legislative activities like those outlined by the Tutu Principles are currently illegal in South Africa.

Nonetheless, "U.S. companies should not disregard ethical obligations to encourage changes in the apartheid system simply because such changes would offend South African law," the report states. Committee members say the difficulty of their demands is evidence of their commitment to produce change in South Africa through Harvard's investments.