June 16, 2000
ANN ARBOR—The University of Michigan Board of Regents voted at its June 15-16 meeting to divest the University of its holdings in tobacco manufacturing companies.
The decision follows the conclusion reached by the Ad Hoc Advisory Committee on Tobacco Investments, a committee of faculty, staff, students, alumni and friends of the University. The committee was established by President Lee C. Bollinger last September after several years of consideration of the issue across the University community. The committee's recommendation urged the Regents to "sell all of the University's currently owned shares of stock (and not to purchase any new shares) in companies that, either themselves or through their subsidiaries, manufacture significant quantities of cigarettes or other tobacco products."
Robert Kasdin, U-M executive vice president and chief financial officer, will instruct the University's investment managers to sell all relevant stocks within the next 10 months. The holdings represent less than one-quarter of a percent of the University's total holdings, and Kasdin says he is confident that "divesting direct holdings of tobacco stocks would have essentially no effect on the riskiness and return of the University's investment portfolio." Determination of which companies manufacture tobacco products or have subsidiaries that do was made by consulting a list compiled by the Investor Responsibility Research Center, a not-for-profit organization that provides impartial information for investors and institutions.
The move to divest was not an easy decision, despite overwhelming support for divestiture sent to the University's administration in e-mail and letters. Endowment investments generally should be based solely on financial factors such as risk and return, according to University policy, and activities of any company are not a relevant concern in that investment. In the end, the committee concluded that both tobacco and the tobacco companies' activities are antithetical to the University's missions of research, teaching and service.
In divesting itself of the tobacco-related investments, the U-M joins several other institutions—Wayne State, Harvard and Northwestern universities—and public pension funds in California, Florida, Maryland, Texas and New York.
Contact: Wono Lee
Phone: (734) 764-7260