Shareholder Responsibility Report Released

The University considered proposals this year on the ethics of its investments, covering issues that ranged from environmental practices to executive compensation, according to its annual report on shareholder responsibility which was released this week.

In the 1998 season, Harvard voted on 87 proxies--shareholder proposals which question whether a company's policies are socially responsible. The University voted in favor of 22, opposed 18 and abstained on the remainder.

These results mark a deviation, albeit a modest one, from the University's normally conservative voting patterns. In 1997, the University voted on 80 proxies. It voted in favor of 15, opposed 38 and abstained on the remainder. In 1996, Harvard voted to approve 14 of the 85 proxies.

"[In 1998] I was pleasantly surprised with the [University]. It was quite activist, quite aggressive in its stand, perhaps even more so than in previous years," said Ali Ahsan '99, who has served for two years on the Advisory Committee on Shareholder Responsibility (ACSR). Ahsan is also a Crimson editor.

Since 1972, the ACSR has been one of two committees working to address questions of shareholder responsibility.

Composed of 12 students, faculty members and alumni, the ACSR analyzes each proxy issue, takes a vote and presents its decision to the Corporation Committee on Shareholder Responsibility (CCSR).

The CCSR, which represents the interests of the president and fellows of Harvard, is composed of University Tresurer D. Ronald Daniel and Robert G. Stone Jr. '45-'47, a fellow of the University and chair of the committee.

The CCSR considers the ASCR's recommendations when making its final vote but traditionally has made more conservative and cautious decisions.

"The CCSR looks to precedent and to where Harvard has been on an issue. The ASCR is trying to bring up new points of view on issues," said Elizabeth A. Gray, secretary to the CCSR and senior associate secretary of the Board of Overseers.

"The CCSR is very literal about every single word in the proxy," she added.

During the 1998 season, the ACSR and the CCSR were in complete agreement on 53 percent of the proposals. In 32 percent of the proposals, the two committees partially agreed, meaning one abstained while the other voted in favor or against.

The ACSR failed to reach a decision in 13 percent of the votes.

In 1997, the committees achieved greater agreement, voting the same way in 70 percent of the proposals.

The Issues at Stake

Last spring, many of the shareholder proposals addressed concerns about environmental violations.

The University considered 27 proposals focused on environmental and energy issues, such as requests for companies to phase out the use of chlorine in paper production, to stop logging of old growth forests and to convert nuclear plants to natural gas.

Following ACSR recommendations, the CCSR voted in favor of a proposal asking General Electric "to adopt a public education effort along the Hudson River Valley, the Housatonic River Valley and other regions where appropriate to warn local residents and visitors of the dangers of fish consumption [due to PCB contamination] and prepare a report to shareholders."

Chronic exposure of animals to polychlorinated biphenyls(PCBs) can lead to disrupted hormone balances, reproductive failures or several forms of cancer.

It also supported a policy of annual pollution prevention review for Tosco, a large, independent oil refiner and marketer of petroleum.

The year before, the University faced fewer proposals involving environmental issues and voted to abstain on or oppose the ones it did consider.

Also, for the first time, the ACSR reccommended approving proposals that ask companies to endorse the Ceres Principles, a code of conduct for the environmentally sound performance of corporations. The ACSR had previously called the Principles poorly written and too hard for companies to implement.

During 1998, Harvard also voted on three shareholder proposals dealing with tobacco. According to a policy adopted in 1990, the University will not purchase stock in companies producing large amounts of tobacco products.

A proxy addressed to H.B. Fuller, a manufacturer and marketer of specialty chemicals and industrial adhesives, requested that the company not sell adhesives to "any tobacco-related entity when they will be used for the production of cigarettes or other tobacco products."

The ACSR voted in favor of the proposal, and the CCSR abstained "following long-standing CCSR precedent," the report said.

"The CCSR has tended to be very concerned about resolutions that are secondarily related to a key product," Gray said. "They're not a cigarette-making company. [It's a question of] how far do you go."

In both years, the committees voted multiple proposals addressing concerns about forced labor, human rights, equal employment, compensation for corporate executives, and military issues including contracting criteria and the sale of military materials overseas.

The Power of Proxies?

Despite Harvard's commitment to carefully review each proposal, many in the academic and business spheres question the efficacy of proxies.

Proxies enable institutions like Harvard to maintain a voice in company decisions about ethics without taking a strong stance.

"It's not at all efficient other than to raise public attention," said Joseph Hinsey IV, Weaver professor of business law. Hinsey said shareholder proposals rarely promote radical change.

Harvard's policy is never to propose proxies and only to vote on those presented by other shareholders.

"To intiate a proxy is to give the University a single voice," Gray said." Because it's a University that...represents so many different points of view and academic freedom is such an important part of the University, Harvard has tended [to do] only those things which it is required to do because it owns stock.

Following ACSR recommendations, the CCSR voted in favor of a proposal asking General Electric "to adopt a public education effort along the Hudson River Valley, the Housatonic River Valley and other regions where appropriate to warn local residents and visitors of the dangers of fish consumption [due to PCB contamination] and prepare a report to shareholders."

Chronic exposure of animals to polychlorinated biphenyls(PCBs) can lead to disrupted hormone balances, reproductive failures or several forms of cancer.

It also supported a policy of annual pollution prevention review for Tosco, a large, independent oil refiner and marketer of petroleum.

The year before, the University faced fewer proposals involving environmental issues and voted to abstain on or oppose the ones it did consider.

Also, for the first time, the ACSR reccommended approving proposals that ask companies to endorse the Ceres Principles, a code of conduct for the environmentally sound performance of corporations. The ACSR had previously called the Principles poorly written and too hard for companies to implement.

During 1998, Harvard also voted on three shareholder proposals dealing with tobacco. According to a policy adopted in 1990, the University will not purchase stock in companies producing large amounts of tobacco products.

A proxy addressed to H.B. Fuller, a manufacturer and marketer of specialty chemicals and industrial adhesives, requested that the company not sell adhesives to "any tobacco-related entity when they will be used for the production of cigarettes or other tobacco products."

The ACSR voted in favor of the proposal, and the CCSR abstained "following long-standing CCSR precedent," the report said.

"The CCSR has tended to be very concerned about resolutions that are secondarily related to a key product," Gray said. "They're not a cigarette-making company. [It's a question of] how far do you go."

In both years, the committees voted multiple proposals addressing concerns about forced labor, human rights, equal employment, compensation for corporate executives, and military issues including contracting criteria and the sale of military materials overseas.

The Power of Proxies?

Despite Harvard's commitment to carefully review each proposal, many in the academic and business spheres question the efficacy of proxies.

Proxies enable institutions like Harvard to maintain a voice in company decisions about ethics without taking a strong stance.

"It's not at all efficient other than to raise public attention," said Joseph Hinsey IV, Weaver professor of business law. Hinsey said shareholder proposals rarely promote radical change.

Harvard's policy is never to propose proxies and only to vote on those presented by other shareholders.

"To intiate a proxy is to give the University a single voice," Gray said." Because it's a University that...represents so many different points of view and academic freedom is such an important part of the University, Harvard has tended [to do] only those things which it is required to do because it owns stock.