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October 23, 1997

Faculty may ask Pitt to divest of tobacco stocks

Now that Faculty Assembly has endorsed a proposal to extinguish tobacco stocks from the College Retirement Equities Fund (CREF) retirement plan, some University Senate leaders are considering asking the Pitt Board of Trustees to divest the University's own endowment of tobacco company stocks.

Pitt owns about $1.6 million worth of stock in companies involved in the tobacco business — representing less than one-quarter of 1 percent of the $662 million endowment, said Marlin Pease, Pitt director of finance and assistant treasurer.

Most of Pitt's $1.6 million is invested in large conglomerates such as Philip Morris Companies, which owns Kraft Foods and Miller Brewing Co., among other non-tobacco businesses, Pease noted.

But regardless of the size or nature of the University's tobacco-related investments, some professors say Pitt should set an example by divesting.

"There has been a fair amount of research done at this University, indicating the health hazards of tobacco use. It seems contrary to what we should be doing, to continue owning stock in tobacco companies," said dental school professor Thomas Zullo, who introduced the Faculty Assembly resolution on divesting CREF of tobacco stocks.

University Senate President Gordon MacLeod, a professor in the Graduate School of Public Health, said, "From a public health point of view, I think there is no question that this University should take a strong stand [against tobacco use]. I would hope we will bring this idea of divestment up to the board, and that the trustees will consider making an exception to their general policy of not considering social issues in overseeing the University's endowment." In June 1996, Pitt trustees adopted a policy that formalized the board's traditional rule of thumb in managing the endowment: Unless the board instructs otherwise, the job of the trustees' investment committee is to see that Pitt invests its endowment money in a way that maximizes returns without taking unacceptable financial risks. Social issues do not come into play.

Trustees approved the policy after the Office of Finance reported that Pitt's ban on South Africa-related investments from March 1987 to June 1994 cost the University's endowment $2.5 million.

Compared with dozens of other major universities, Pitt was slow to sell off its investments in companies doing business in the then-racially segregated South Africa. For years, the board resisted calls for divestment by anti-apartheid groups. Trustees rescinded the anti-South Africa policy soon after the country's white minority government dissolved, as did many other schools.

In spring 1996, the American Medical Association urged investors to rid their portfolios of tobacco stocks and shares from mutual funds that invest in tobacco stocks. Foreseeing pleas by Pitt students and employees to divest in tobacco companies — as well as weapons manufacturers, nuclear power producers, and businesses that experiment on animals — the board adopted its policy against non-financial limits on Pitt investments in June 1996.

When the board's investment committee first discussed the policy, the committee considered offering people who donate to Pitt a new option: They could earmark their gifts to a "socially conscious" investment fund within the endowment.

The board has yet to act on that idea. But according to Finance Director Pease, the administration is considering creating such a fund, as Pitt gears up for a major capital campaign. "It [a 'socially conscious' fund] is something that might appeal to a number of donors, and we've begun looking into it," he said.

— Bruce Steele

Filed under: Feature,Volume 30 Issue 5

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