Universities remain under ethical-investment learning curve

When it comes to the world of socially responsible investing or SRI, the University of Toronto and several other Canadian campuses continue to receive a failing grade.

Searching for answers to this fact leaves even Michael Jantzi, one of Canada’s leading spokespersons on social investment and corporate social responsibility issues, scratching his head.

“That is something I get asked to comment on a lot … I just simply don’t have the answer,” Jantzi said. “I don’t know why Canadian campuses and universities are not looking as closely at these issues as their counterparts around the world.”

The issues Jantzi speaks of have to do with whether or not the U of T’s investment practices take into account effects on environmental, social and governance factors.

For example in 2007, the U of T, citing ethical concerns, divested over $10 million from its tobacco stocks. However, this only came about after over 15 years of petitions and pressure from students and student groups alike.

The University of Toronto’s Governing Council quoted the binding nature of its fiduciary responsibility to stakeholders, which states that maximizing stakeholder profits is the University’s sole concern.

George Luste, president of the University of Toronto Faculty Association argues that because the opinions of the U of T’s stakeholders can vary widely, getting a general consensus on what investments they believe to be ethical versus unethical can get complicated. Luste does agree, however, that the U of T does have a mandate.

‘It’s fair game when it comes to investing’

“I don’t agree with it, but the University of Toronto has this attitude that if its not against the law then it’s fair game when it comes to investing,” Luste said.

Interestingly enough, SRIs could have achieved the University’s desired goal of maximum return. According to the Social Investment Organization, Canadian SRI has clearly taken off. From 2004 to 2006, SRI investments in Canada increased from $65 billion to $503 billion.

“With regards to financial returns … I think you’re seeing that SRI products and that of investing is still producing very competitive returns,” Jantzi said.

Not all Canadian universities have tuned out SRIs. The University of Western Ontario and McGill University have recently added SRI options to their pension plans. But like the U of T, many still have a lot of catching up to do.

“They are still in their discussions that are caught up in the debate around what I would call SRI of 20 years ago,” Jantzi said. “And there’s a reason for it: there’s still a learning curve I think for post-secondary institutes here in Canada to understand what’s happening in this area.”

One of the people attempting to bring these institutions up to speed is Dr. Samantha Nutt, founder and executive director of War Child Canada and an assistant professor at the University of Toronto in the Department of Family and Community Medicine.

For the past 10 years, Dr. Nutt has travelled and helped out in war zones across the world and has been trying to use these experiences to send the message of social responsibility and accountability back to countries of privilege like Canada in order to make the connection between investment and impact more real to the public.

‘We are intrinsically linked to those systems’

“Whether you’re talking about oil, conflict diamonds, the arms trade or our financial investments,” Nutt said. “We do have an impact on a global level and it’s in realizing these connections and making some fairly simple changes … we can reduce our connections to war and be a part of providing a climate of peace.”

Ausma Malik, an International Relations and Political Science major at the U of T, agrees with Nutt in that citizens from countries of privilege need to take action if they wish to remove themselves from systems that perpetuate exploitation, aggression and war.

“We are intrinsically linked to those systems and we do need to begin critiquing them and not just sitting back and doing that, but actually in a way that does effect change,” Malik said. “And that takes a lot of consistent effort and action.”

Ironically, the executive administrators of institutions that employ faculty members such as Dr. Nutt to teach students like Malik to think beyond the box about social and environmental issues do not seem to be aware of the issues themselves.

“These are things now that a growing number of investment managers understand. Certainly a growing number of large pension plans understand,” Jantzi said. “What is sometimes a curious curiosity to me is that these issues are still not understood broadly by (Canadian) post-secondary institutions.”

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Posted: Mar 31 2008 5:45 pm
Filed under: News