There are few issues in the Carleton community as contentious as divestment.
After numerous protests led by Students Against Israeli Apartheid (SAIA), the issue has only increased in prominence.
For over a year now, SAIA has been arguing that Carleton’s pension fund should not include holdings in companies that are “complicit in the Israeli occupation of the Palestinian territories,” said SAIA member Dax D’Orazio.
As such, the group is supporting a Boycott, Divestment and Sanctions (BDS) campaign, calling for Carleton to divest from companies such as Motorola, Tesco Supermarkets, and Northrop Grumman, an international weapons manufacturer.
The group also wants Carleton to implement a “socially responsible investment policy,” D’Orazio said.
“Right now, the pension fund committee has only one primary concern, and that is to maximize profit,” he said. “A socially responsible investment policy would take into consideration other factors, social, environmental, [and] human rights.”
However, Carleton president Roseann Runte said the changes Carleton made to the investment policy in 2010 actually do more than the divestment SAIA is asking for.
Carleton formed a binding responsible investment policy in the fall of 2010, said Betsy Springer, chair of the pension committee, via email.
“A socially responsible investment policy says we are not going to stand up tomorrow and sell all of our things that might be having anything to do with war or whatever, cigarettes or bad environment things,” Runte said. “But what we will do is every time we purchase new ones, we will only purchase ones that we consider to be green, that we consider to be peaceful and good.”
With this policy, the pension fund committee is guided by certain principles, “taking into account environmental, social and corporate governance (ESG) issues may better align the portfolio with the interests of our plan members,” Springer said.
Though the policy is a step in the right direction, D’Orazio it isn’t what SAIA wants. It’s “reactionary,” he said.
“We could say it is a very tepid advancement, but as it stands it’s basically toothless,” he said.
However, the issue of divestment, specifically as it pertains to the university’s pension plan, is much bigger than the recent discussions, said Bill Lawson, an adjunct professor and representative of Carleton’s pension fund committee.
“[It’s] a very broad issue. The question is a matter of policy and legal responsibility,” he said.
“This is not a simple, ‘Oh yes don’t buy x, y, or z’ sort of proposition.”
Since divestment is such a complex issue, the best way to understand it is to first understand how the pension plan works, said Ian Lee, a business professor at Carleton.
The pension plan receives a premium from every employee at Carleton, according to Lee. An additional premium for every employee is added by the employer, which is, in this case, the university administration. The money is given to investment managers hired by the pension fund committee. Following recommendations by the committee, they then invest the money into the stock market, Springer said.
The investment managers, who are fiduciaries of the fund, have a legal responsibility to invest wisely, Lee said.
“The legal duty of care of fiduciaries is much higher than normal people,” he said. “If you want squander your own money, you’re perfectly entitled to do so. Fiduciaries can’t do that.”
The changes to the pension plan that SAIA is proposing might not even be allowed by Ontario’s Pension Benefits Act, Lawson said, because the act says risk must be minimized and return must be maximized when investing for a pension plan.
But SAIA’s own research shows the changes they want wouldn’t impact the financial security of the fund, D’Orazio said.
“We’ve actually shown that these companies . . . have collectively lost the pension fund money,” he said.
However, Springer said she believes the policy is a reflection of Carleton’s investment practices.
“We are confident that Carleton’s policy reflects best practice in [responsible investment],” she said.
If a divestment strategy like one proposed by SAIA was put into place at Carleton, the effect on the community could be significant, according to Mira Sucharov, an associate political science professor at Carleton.
“It would create I think a more polarized atmosphere, so it isn’t any more a discussion about Israeli policies, but it’s a discussion about the legitimacy of Israel itself,” she said.
After the Board of Governors declined SAIA’s proposal, the issue was no longer in discussion for the pension fund committee, Springer said.
“The university did not divest, and there are no plans for the decision to be revisited,” she said.
However, Runte said the divestment issue could be a non-issue in future years because of the way the new policy works. Ultimately, Runte said the university could divest from the companies SAIA would like them to, but it’s dependant on finances.
“If we don’t make money on the committee and just sell things then we have failed in our duty to [retirees],” she said. “I feel very comfortable that we did the right thing . . . who knows, we might not even have those companies anymore. We won’t know until the end of the year when [the pension committee] makes their report.”
