Amnesty International accused Penn of failing to adequately screen its investments in venture capital for their potential to contribute toward human rights abuses.
In a report released Wednesday, Amnesty's scorecard graded the universities with the ten largest endowments in the United States on the adequacy of their human rights due diligence when it comes to VC investing. Penn was joined by Stanford, Princeton, Duke, MIT, the University of Chicago, and the University of Texas in receiving a grade of D or F. The University of California System, Harvard, and Yale passed the scorecard according to Amnesty's assessment.
Penn, with a D grade, tied Stanford with a score of 18 out of 40, compared to the University of California System's 39, Harvard’s 33, and Yale’s 24. The University of Chicago scored zero.
Amnesty conducted their research primarily using publicly available documents on university websites, and disclosures made to the Sustainability Tracking, Assessment and Ratings System database. Schools were grouped under four categories: “Commitment to Responsible Investment,” “ESG Integration and Due Diligence,” “Stewardship and Engagement,” and “Disclosure & Transparency.”
However, this research might not reflect the extent of investment offices’ internal screening and due-diligence practices. Michael Kleinman, Amnesty International’s national director for tech and human rights, told The Daily Pennsylvanian that the reliance on publicly available information was by design. A lack of information, he said, “makes it that much more difficult for there to be any kind of oversight.”
Kleinman also pointed to the value of public commitment as “something that we can hold [universities] to” when it comes to the possibility of them engaging in empty virtue-signaling.
“The question isn't necessarily, ‘are they just checking a box,’ but the fact that by checking that box, it allows those who care about these issues to put more and more targeted and effective pressure on these institutions,” he said.
Amnesty also requested information from the universities’ investment offices “but did not hear anything back,” Kleinman alleged.
Penn lost marks on the scorecard for its lack of an Environmental and Social Corporate Governance (ESG) policy, according to Amnesty. Yale, Harvard, and the University of California make public their ESG policies, and the latter two are signatories to the United Nations Principals on Responsible Investing, which includes six commitments in line with advancing ESG.
Most ESG-adjacent information on Penn’s Office of Investments website relates to the endowment’s net-zero by 2050 goal. In November, Penn announced that it no longer held direct investments in fossil fuel companies.
Amnesty also examined each university’s Committee on Investor Responsibility. Penn received credit for its Social Responsibility Advisory Committee, which includes faculty, staff, alumni, and student representatives, and is responsible for advising the Board of Trustees and the Trustee Proxy Voting Subcommittee.
However, the University’s disclosure of SRAC activities to STAR only focused on sustainability-focused initiatives, according to Amnesty. SRAC has had only a single introductory meeting this semester, with a second meeting scheduled for May 3.
“Penn is middle of the pack, [and] the middle of the pack is scoring 18 out of 40,” Kleinman said. “Not only is that, I think, deeply problematic for Penn, but unfortunately, Penn is emblematic of a much larger problem.”
This report focused on University endowments comes two years after Amnesty’s publication of a report on how VC firms themselves “ignore human rights” when making investment choices.
To Amnesty, investors cannot trust the VC firms themselves to use their investments responsibly. Instead, they must take “proactive and ongoing steps to identify and respond to the potential or actual human rights impacts of their investments,” according to the report.
As of 2020, according to Amnesty, the investment offices of Universities account for $426.9 billion in managed assets, of which 15% on average is invested in VC funds. At Princeton, 30% of the endowment is in venture capital.
Penn’s investments, along with other universities, have long been the subject of political scrutiny. In March, House Republicans alleged that Penn has investments in three Chinese companies included on a list of those “potentially hostile” to U.S. interests. They also asked for information about the Penn Biden Center’s funding structure.