Harvard, Be a Responsible Owner!

This post was originally published in The Harvard Crimson on May 17, 2013

By KEVIN S. WANG, ALEXI WHITE, and CAROLINE T. ZHANG

Harvard University owns companies around the world and is a controlling stakeholder—that is, a majority shareholder, majority owner, or full owner—of over 100 companies. As a center of higher education and a leader of the community, Harvard holds itself to principles of environmental sustainability, non-discrimination, and labor rights. Its pledges to reduce emissions and to pay its workers a living wage are just a few examples. Our commitment to transparency, fairness, sustainability, and human dignity should not end at Harvard’s gates. Harvard must be a responsible owner of all its investments, particularly of the companies in which it owns a controlling stake. It has special ability, and special responsibility, to work with these companies to improve their practices.

There are numerous inconsistencies between Harvard’s policies on campus and those of its companies. Last year, food service workers at Harvard Law School asked the University for a fair process to unionize. Harvard agreed, remaining neutral in their unionization process and respecting the majority of workers’ request to form a union. However, at the DoubleTree Hotel in Allston, also owned—but not managed—by Harvard, workers have not been granted a fair process to create and join a union without intimidation or interference from managers, despite repeated requests. In fact, workers at the DoubleTree even filed suit with the National Labor Relations Board in April 2013, alleging that management illegally interfered with their unionization process. Why should the workers at a hotel directly owned by Harvard be treated any differently than workers on this campus?

Harvard directly owns at least 11 companies in Chile. One, Agrícola Brinzal, is currently being sued by CONAF, the National Forestry Corporation of the Ministry of Agriculture of Chile, for multiple violations of Chilean law against deforestation. Another Chilean company owned by Harvard, Agrícola Duramen Limitada, was fined by Chilean courts for similar activity. A company owned entirely by Harvard should not be engaging in alleged illegal logging practices.

As members of the Responsible Investment at Harvard Coalition, we ask that Harvard University and Harvard Management Company be responsible owners with all funds and companies in which it holds a controlling stake—that is, in which it is a majority shareholder, majority owner, or full owner. We demand that Harvard act to ensure that the policies of these companies comply with basic standards of responsibility.

First, Harvard’s companies must comply with all local, national, and international laws and treaties in all areas where the company is operating, whether or not these laws are rigorously enforced by local authorities.

Second, Harvard must ensure that its companies are acting as sustainably as possible, as Harvard has committed to do on campus. The University’s website states, “Harvard University believes universities have an accountability to the future—a special role and a special responsibility to address global challenges as large as climate change and environmental sustainability.” Harvard’s Sustainability Principles note, “The University has an affirmative record of responsible compliance with environmental and safety regulations and a proven effective system of environmental management accountability.” Harvard’s companies should embody these principles too.

Third, Harvard’s companies must recognize workers’ right to collective bargaining and union representation, as well as promise neutrality and a fair process for unionization, even if these rights are not enshrined in local legislation. They must also guarantee parity in wages and benefits between directly hired and sub-contracted employees.

Fourth, Harvard’s companies must respect land rights, including the rights of small farmers and indigenous people. They must not infringe on any legitimate land tenure rights, including where such rights are not formally recorded, and they must seek to prevent all violent conflict over land tenure rights.

Fifth, Harvard’s companies must adhere to Harvard’s hiring and employment policies. The University’s own published non-discrimination policy states that “Any form of discrimination based on race, color, sex, sexual orientation, gender identity, religion, age, national or ethnic origin, political beliefs, veteran status, or disability unrelated to course requirements is contrary to the, principles and policies of Harvard University.” The same policy must apply for all of Harvard’s companies.

Finally, Harvard’s companies must be transparent and accountable. They must produce and publish online annual reports disclosing all political contributions, lobbying activities, the position and compensation of the top 10 highest-compensated employees, and conflicts of interest.

We have laid out these principles—and a way for Harvard to enforce and remain accountable for them—on the website of the Responsible Investment at Harvard Coalition. We demand that Harvard become a responsible owner now, by working toward a fair unionization process for the workers at the DoubleTree, by rectifying any alleged illegal deforestation in Chile, and by adopting our proposed Standards for Responsible Ownership for all of its companies.

Harvard’s companies should not be harming the environment, their workers, or the world. Harvard has the ability to bring about change in the companies it controls, and the moral obligation to do so.

Kevin S. Wang ’16 lives in Stoughton Hall. Alexi White, MPP ’13, is a student at the Harvard Kennedy School. Caroline T. Zhang ’16, a Crimson news writer, lives in Wigglesworth Hall.

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Students Press President Faust on Chilean Investments

Despite the downpour, thirty Harvard students marched to President Faust’s office on Thursday, May 9 demanding answers. Agricola Brinzal, a Harvard-owned forestry company operating in Chile, has been accused of systematically violating that country’s environmental laws, and the Harvard community deserves a full explanation.

Francisco Meneses, a Chilean student at the Kennedy School, spoke forcefully about the need for the University to respect the environment and human rights wherever it invests, and led a delegation of undergraduate and graduate students into Massachusetts Hall, where President Faust’s office is located. The group hand-delivered a letter urging the University to disclose its rationale for its Agricola Brinzal investment and adopt clear environmental, social, and governance protections.

Though President Faust was unavailable to speak to students, that didn’t stop those gathered from raising their voices as a reminder of Harvard’s shared values and our collective responsibility to the world beyond Cambridge.

Watch Francisco speak out about environmental abuses in Chile

See pictures of the event

Read the letter delivered to President Faust

See the media advisory

Letter to President Faust on Chilean Investment Scandal

May 9, 2013

Dear President Faust:

We write to you regarding Harvard’s lackluster response to the serious allegations of wrongdoing by Agricola Brinzal, a 99.9% Harvard-owned forestry company in Chile. The details of the case and the position of the Responsible Investment at Harvard Coalition can be found in the April 30 op-ed in the Harvard Crimson entitled “Harvard’s Exploitation in Chile.”

We first brought this matter to your attention on April 26, when over 35 students and community members gathered outside your office to demonstrate support for the adoption of new policies that would set Harvard on a path toward responsible ownership. We asked for an investigation and response to the situation in Chile, preferably by May 8. Unfortunately, the only public statement Harvard has made on the issue was an online comment posted to the Crimson website by senior communications director Kevin Galvin. The private response sent today to Michael Danto and Stephanie Cappa did not address the concerns expressed by the Responsible Investment at Harvard Coalition. We would like Harvard to clarify its due diligence and oversight procedures for directly-owned companies.

Mr. Galvin implied in his comment that Agricola Brinzal would not be found guilty of any wrongdoing and that any past the wrongdoing occurred before Harvard took ownership of the land on which the company operates. This response is not sufficient for the following reasons:

Agricola Duramen Limitada, a similar Harvard-owned company in Chile, has already paid fines for its environmentally damaging practices. Without clear standards for responsible environmental, social, and governance practices in directly-held companies, how can we – and Harvard – be confident that similar abuses will not occur in the future?

Even if all legal violations occurred before Agricola Brinzal purchased the land, this still casts doubt on the judgment of Harvard’s investment managers. If Harvard considers ESG criteria, as HMC has often claimed, why does Harvard’s company intend to profit from recent environmental violations?

Finally, since Harvard owns a near-total stake in this company, what is its plan for improving the property’s management and preventing such practices from occurring in the future?

We await a full explanation of this case and the investment policies that led to it.

Best wishes,

Responsible Investment at Harvard Coalition

View the May 9 Letter to President Faust

Media Advisory: Harvard Students Demand Answers in Ongoing Chilean Investment Scandal

MEDIA ADVISORY

Date: May 8, 2013

ContactAlexi White (617-413-5972, alexi_white@hks13.harvard.edu)

Cambridge, MA—In response to Harvard’s evasive response to the Chilean government’s lawsuit against university-owned Agrícola Brinzal, students will rally on the steps of Widener Library to demand answers from the Harvard administration.

Who: Responsible Investment at Harvard Coalition; Responsible Endowments Coalition; Francisco Meneses, a Chilean student at Harvard’s Kennedy School

What: Rally demanding answers from Drew Faust, the President of Harvard University, regarding Chilean government lawsuit

When: Thursday, May 9 at 1:00 PM

Where: Steps of Widener Library in Harvard Yard

Background Information:

Chilean Court Case

A report from Chile’s Center for Investigative Journalism (CIPER) describes how the company has cleared large swaths of native forest and reforested with eucalyptus trees. The Ministry of Agriculture’s National Forestry Corporation has brought multiple lawsuits against Agrícola Brinzal for its illegal deforestation and reforestation practices. The company’s logging practices are not only illegal, they are also environmentally damaging to Chile’s forests and the local farming community.

Harvard’s Ownership

Harvard owns 99.99% of Agrícola Brinzal through a wholly-owned subsidiary called the Phemus Corporation, which enjoys nonprofit tax status. According to Harvard’s tax filings, in 2010 the company generated more than half a million dollars in income for the Harvard endowment. This money was used to employ professors, fund scholarships, and otherwise support Harvard’s mission. This includes the Harvard Forest, a research center where experts investigate the destructive effects that habitat degradation and development can have on the environment and local communities.

Students Demand Answers

One week ago, on April 26th at 1pm, 35 students hand-delivered an invitation to President Faust’s office to explain Harvard’s investment in Agrícola Brinzal and demanding a plan to make investments more responsible.

The outcry from Harvard students and Chilean citizens comes after a series of ethically dubious investments from the Harvard Management Company. A growing group of students, faculty and staff are pressuring the university to change its investment principles. In April, 45 students gathered from across six graduate schools and the College to plan for future campaigns.

Summary of April 30 event at Harvard Club of San Francisco

On April 30, 2013, the Harvard Club of San Francisco hosted an event on Sustainable and Responsible Investing to raise the level of understanding of this topic and to create awareness of the efforts of the Responsible Investment at Harvard Coalition.

Nina Gardner A.B.’82, member of the Advisory Board of RI@H moderated the panel consisting of Patricia Farrar-Rivas, CEO Veris Wealth Partners and Jean Rogers, Founder and ED of the Sustainability Accounting Standards Board. Forty members and friends attended, expressing great interest during an extended question and answer session.

The event was organized by Helene Marsh, A.B. ’82, who also serves on the Advisory Board of RI@H.

 

The panelists and moderate pose for a photo after the event (left to right: Patricia Farrar-Rivas, Jean Rogers, and Nina Gardner):

photo (70)