With the recent decision by PepsiCo, Inc. to join several other companies in ceasing to do business in Burma, all institutions and organizations with business ties to the troubled nation -- including American colleges and universities -- have been forced to re-evaluate their investments.
For Dartmouth, which in the 1980s experienced a tumultuous battle over whether or not to divest from South Africa, the recent pullout again brings to light the issue of how the College decides where to do business.
According to College Director of Investments Jonathan King, the College does not have any direct investments in Burma -- a nation controlled by a military regime which has a reputation for serious human rights abuses.
Yet, in the current global environment with many markets and businesses worldwide, King could not say with "100 percent certainty" that the companies which the College has investments in do not have corporate ties to Burma.
"In the Investment Office, we don't set policies regarding any kind of social investment standards," King said.
"It's our role to maximize the return given the policy and risk parameters given" by the Board of Trustees, King said. "Our role is to find the best investments we can. If the Board chooses to put limitations, that's their policy."
The College's investment policies in relation to issues of social concern is handled by the Council on Investor Responsibility, which submits recommendations to the Board of Trustees, according to Treasurer and Vice President Lyn Hutton, a member of the council.
Investment managers hired to handle the College's assets are given "complete discretion," Hutton said. "We don't tell them they can't invest in certain companies."
"We don't ask our managers to make social judgments," Hutton said. The managers invest in securities that are economically viable and that meet their investment objectives.
"If companies are engaged in illegal acts, generally, their securities aren't traded," Hutton said.
"Asset allocation is governed by a certain hurdled rate of return on the endowment," Hutton said.
The return is used to increase purchasing power, to cover the cost of management, to cover the endowment and covers 18 to 19 percent of the College operating budget, she said.
The CIR has reviewed shareholder proposals and proxies dealing with Burma, but made no recommendations to the Board.
PepsiCo's decision to divest comes after Heineken, Columbia Sportswear, Motorola, Apple, Hewlett-Packard, Walt Disney and J. Crew all took similar measures within the past few months, according to a press release from the Free Burma Coalition, an Internet-based activist group.
The Free Burma Coalition has called the Southeast Asian country, "The South Africa of the '90s," referring to the mid-1980s anti-apartheid divestment movement.
Before pulling out, Pepsi's involvement in Burma had sparked student protests on campuses across the nation. According to the Wisconsin State Journal, the beverage company lost contracts with Colgate University, Harvard University and Stanford University.
For a college or university, divestment is a "tremendously drastic decision," Hutton said.
In the entire history of the College, the Board of Trustees has placed restrictions on College investments in relation to social concerns only twice, she said.
In 1985, students built shanties on the Green to protest the College's investment in apartheid South Africa. The College's non-action regarding the shanties led to a group of students destroying them with sledgehammers in 1986.
It was still not until 1989 that the Board voted to divest completely from South Africa. Asset managers were restricted from holding stock or securities of companies that conducted business in the country, Hutton said.
The Board decided to reinvest in South Africa in 1993.
That same year, the Trustees ordered the College to divest its $6.8 million in holdings in Hydro-Quebec, a Canadian hydroelectric company.
Critics claimed that Hydro-Quebec's Great Whale River project threatened the environment and human rights of the Native Americans in the area near the project.
The Hydro-Quebec issue was "very controversial to Native Americans," Hutton said.
The council realized that investment in Hydro-Quebec "could deeply and did deeply offend the Native American community, thus [the council] refrained from it," Hutton said.
The CIR -- comprised of two students, two faculty members, two alumni, two administrators and three Trustees -- has not met this year, "because it does not have an agenda," Hutton said.
"The last time [the CIR] met was about a year ago to discuss [the College's] policy regarding companies that manufacture tobacco products, and no motion came forward from it." she said.
Oftentimes, there are two issues in the decision to divest -- whether to refrain from holding stock and securities in the companies with ties to the controversial government and whether or not to continue to use the products of those companies.
In the Hydro-Quebec case, the utility company sold energy to Granite State Electric, Hutton said. This called into question, according to Hutton, "Can we continue to take energy? Should we hold stock in these companies?"
