As a part of April’s agreement to end the encampment on Deering Meadow, Northwestern agreed to reestablish the Advisory Committee on Investment Responsibility, a body that advises the Board of Trustees on investment concerns. But a look at the ACIR’s history and divestment efforts across the country casts doubt on the committee’s likelihood of influencing NU’s investment strategy.
University President Michael Schill told The Daily in an Oct. 10 interview that administrators expect to roll out the ACIR by the end of the calendar year. The application deadline for the ACIR is Nov. 27, according to University spokesperson Hilary Hurd Anyaso.
The committee will include faculty, students, alumni and staff, including Chief Investment Officer Amy Falls. The ACIR will meet regularly to discuss issues raised by the NU community, though the Board of Trustees has authority over changes in the University’s investment policies, according to Hurd Anyaso.
Given the University’s unwillingness to accept proposals from the previous iteration of the ACIR, students and faculty have questioned whether or not the newly constituted ACIR will bring change.
In his May interview with CNN, Schill said he will never recommend divestment to the Board of Trustees — a position he has since reiterated in his testimony before the House Committee on Education and the Workforce and in his October interview with The Daily.
NU’s chapters of Educators for Justice in Palestine, Students for Justice in Palestine and Jewish Voice for Peace are among several organizations that have called for the University to divest from Israel. The NU Graduate Workers Union also passed a resolution on Oct. 9 pushing the University to divest from Israel.
Over the past 50 years, NU students have demanded divestment for various reasons to varying degrees of success.
In 2005, the University instructed its management firms to sell holdings in four foreign-owned companies that were linked to supporting the government regime of Sudan.
Beginning in 2012, Fossil Free NU, formerly Divest NU, called for the University to divest from coal companies. In 2015, it presented a proposal to the Board of Trustees asking the University to eliminate holdings in coal companies.
The Board of Trustees rejected the proposal, leading some students to negotiate for a more transparent relationship with the governing body. That resulted in the creation of the ACIR in November 2016.
The first meeting of the ACIR was held in May 2017 with the goal of facilitating communication between the NU community and the Board of Trustees’ investment committee.
“I never really fully understood what investment responsibility was,” said psychology and SESP Prof. David Uttal, who served on the ACIR from 2019 to 2021. “Investment responsibility could mean a lot of things, (but) it did come down to functionally, mostly about divestment.”
In June 2019, Fossil Free NU reintroduced a 2013 divestment proposal to the ACIR calling for the University to cut investments from the top 100 coal, oil and gas companies.
“There should be a mechanism of change that doesn’t have to always originate with a student or someone else writing a lengthy proposal, because that’s hard,” Uttal said. “I’ll never forget one student said, ‘only the privileged have time to write proposals.’”
Months passed without students or the ACIR hearing from the Board of Trustees about the proposal. Uttal said members of the ACIR kept “bugging” the Board of Trustees but that contact was scarce and took a long time.
After Fossil Free NU submitted its proposal in 2019, the Board of Trustees released a statement on investment responsibility.
“The Trustees believe that in most cases, divestment from the University’s Endowment is an ineffective means of exercising investment responsibility,” the statement said. “However, the Trustees recognize that, on very rare occasions, a continued investment may be so morally reprehensible, such as investments that directly support slavery, apartheid or genocide, that such investment would necessitate the University’s divestment.”
Eight months after the proposal was submitted, the Board of Trustees rejected the proposal, saying it did not fit the criteria outlined in its statement on investment responsibility.
After the rejection, Uttal said three members of the Board of Trustees met with the ACIR and articulated their reasons for rejecting the proposal. The conversation would have been more productive if it had been held before the rejection, he said.
“This committee, if it’s to be taken seriously and to have any effect or agency, needs to have pretty easy access to some subcommittee of the Board of Trustees and good faith that they (will) report to the larger board,” Uttal said.
Nationally, pushes for elite universities to cut ties with Israel have seen dismal prospects. After Brown University agreed to schedule a vote on divestment in a deal ending the pro-Palestinian encampment on its campus, the school’s governing board rejected a student divestment proposal earlier this month.
Students have also questioned the new committee’s potential on the grounds of the University’s implementation of another stipulation in the Agreement on Deering Meadow: a commitment to “answer questions from any internal stakeholder about specific holdings, held currently or within the last quarter, to the best of its knowledge and to the extent legally possible.” In a June statement, NU SJP criticized the University for declining to disclose investments that fall below a “de minimis threshold,” defined as 0.1% of its endowment assets.
“(The University has) disclosed extremely little of what (students) requested from them,” said a Palestinian student who asked to remain anonymous for fear of retribution from the University and doxxing. “Essentially, (I have) no faith that this committee will actually do anything, but in an ideal world, they would actually be transparent about their investments.”
Pritzker Prof. Max Schanzenbach said divestment from Israel is almost impossible under the University’s endowment management.
Most universities today use outside management firms to oversee their investments. Typically, these firms don’t face many restrictions, Schanzenbach said. NU directly manages only about 8% of its endowment.
Schanzenbach said placing substantial restrictions on outside managers’ investments can cost the endowment millions. While NU can limit its direct ownership of interests, it would have a minimal effect since most of the endowment is managed indirectly, he said.
“It’s hard to think of a Board of Trustees saying we’re going to go back to a system of direct ownership so that we can engage in lots of social cause divestments,” Schanzenbach said.
Schanzenbach also said if the Board of Trustees divests for reasons other than financing education, it could face fiduciary liability by going against the University’s obligation to its charitable purpose of higher education under federal legislation on institutional fund management.
The Uniform Prudent Management of Institutional Funds Act provides guidance on investment decisions and rules for spending endowment funds for charitable religious, educational, scientific and literacy institutions.
“I really do think (divestment is) ineffective as a matter of achieving the social ends, no matter what they are, because the board does face some meaningful legal constraints,” Schanzenbach said. “I think they would be better off lobbying for programmatic changes, whether it’s particular scholarships or financing a particular scholarly pursuit or a student organization.”
Email: [email protected]
Related Stories:
— Administrators, student demonstrators reach agreement to end encampment on Deering Meadow
