Group of profs argues for tobacco divestment
Gutmann argued against divestment as a 'political tool' unless there is consensus
January 29, 2014, 8:34 pm · Updated January 30, 2014, 12:48 am·
A group of faculty are pushing for the University to cut financial ties with the tobacco industry.
The focus of Wednesday night’s University Council meeting in Bodek Lounge in Houston Hall was a proposal for Penn to divest from tobacco companies. The resounding question was how to balance a moral social responsibility with financial responsibilities.
Four faculty members from across several different schools brought the proposal for divestment before the Council.
Philosophy professor Michael Weisberg began the discussion with a presentation on the background of tobacco companies, citing that tobacco use remains the leading cause of death around the world. He argued that Penn’s investment in tobacco companies is “antithetical to Penn’s mission of education, research and health.”
Tobacco companies’ practices of marketing to young children in developing countries are a moral evil, Weisberg said. He used the Hospital of the University Pennsylvania’s new policy of not hiring smokers and the 2014-2015 academic year theme — the Year of Health — as examples of campus-wide consensus.
According to the divestment guidelines put forth by the Board of Trustees , divestment proposals must meet certain criteria: There must be an identified moral evil that creates substantial social injury, the companies targeted for divestment must have clear and undeniable links to the social injury and the divestment proposal must have the broad support of the campus community at large.
Penn President Amy Gutmann acknowledged the importance of distinguishing a moral evil from something that is simply “bad” and argued that the University cannot divest from a company based on personal preferences.
Divestments that would financially constrain Penn’s portfolio would not live up to the University’s fiduciary responsibilities to its donors, she added.
“If there isn’t a consensus in the University, then we’re using the portfolio — as opposed to other things — as a political instrument rather than an instrument for maximizing long-term return that supports scholarships, professorships and other core missions of our University,” she said.
Gutmann highlighted the disagreement on what constitutes a moral evil and whether there exists a whole University commitment against the sale and use of tobacco.
Other skeptics of the divestment proposal suggested that Penn utilize its position as a stockholder in tobacco companies to create some positive influence in the tobacco market.
Christopher Geczy, academic director of the Wharton Wealth Management Initiative, maintained that divestment is often a financial constraint and that socially responsible portfolios tend to limit diversification and raise the operating costs of the endowment.
Deputy Dean of Penn Law William Bratton suggested that divestment by itself does not actually accomplish much. Rather, he argued, it would only add Penn’s name to a growing list of peer schools choosing to divest. Harvard and Stanford universities, for example, divested from tobacco in the 1990s.
Following the meeting, College junior and Vice President of the Undergraduate Assembly Gabe Delaney argued that divestment may not be the appropriate route with respect to tobacco companies.
“I don’t like the fact that the University invests in tobacco companies, but that’s not cause to limit the work of the people who run the portfolio,” he said.
While the Council did not vote on the proposal Wednesday, it will vote in the future on whether there is a reasonable basis to proceed. If the measure passes, an ad hoc committee will be convened to study the proposal further.
Earlier this school year, students advocated for University divestment from the fossil fuel industry. Divestment at Penn, a student group, faced pushback from the administration on the proposal. Fossil fuel divestment movements at other universities over the past year have been similarly unsuccessful.
The next Council meeting will take place on Feb. 19 and will be an open forum.