On Dec. 7, 2023, Smith College’s chapter of Students for Justice in Palestine (SJP) formally requested that the College divest from seven prominent global weapons manufacturers. Subsequently, they expanded their demand to encompass divestment from all military contractors and weapons manufacturers. On Mar. 26, 2024, the Advisory Committee on Investor Responsibility (ACIR) issued a campus-wide email disclosing their decision not to endorse SJP’s proposal to the Investment Committee.
When questions of social responsibility and investing arise, it is the role of the Advisory Committee on Investor Responsibility (ACIR), a subcommittee of the Investment Committee of the Board of Trustees, to ensure that the “endowment continues to be investment in a manner consistent with — and supportive of — the college’s mission and values.”
Following ACIR’s decision, students have launched a protest by occupying College Hall, signaling their discontent and urging for deeper commitment to divestment. Long before the events of Oct. 7, 2023, when calls for divestment gained traction among the student body, students and stakeholders had urged Smith College to review its investment practices and align them with the values shared by the College and its students.
A History of Divestment Movements at Smith
The roots of the divestment movement trace back as far back as 1986, when as many as 200 students occupied College Hall to protest the trustees’ refusal to completely divest from companies linked with the South African apartheid system. In 2013, Divest Smith College was born, focused on fossil fuel divestment.
In 1986, after a week of protests, an agreement was reached among demonstrators, President Mary-Maples Dunn and the board of trustees. Fast-forward to 2006, when the Board of Trustees took a significant step in divestment by voting to ban investments in companies directly or indirectly supporting the Sudanese government regime.
In 2017, discussions with members of Divest Smith College led the ACIR to propose halting future direct investments in fossil fuels, opting instead for fossil fuel-free impact investments. By 2019, the Board, in alignment with the ACIR’s suggestions, promptly excluded investments managed by fossil fuel-specific entities from Smith’s endowment.
Smith’s SJP has been holding “Boycott, Divest, Sanction (BDS)” forums since 2014, according to the Smith Social Network. On Nov. 14, 2023, they shared a petition with President Sarah Willie-LeBreton asking Smith to “Divest from all military contractors Smith funnels money into.” In response to the ACIR’s decision to not recommend SJP’s proposal, protesters decided to occupy Smith’s main administrative building until a second ACIR emergency meeting is called for divestment.
ACIR’s decision
In its email, the ACIR referenced Smith College’s “negligible” and “entirely indirect” endowment investments in military contractors and weapon manufacturers as grounds for not endorsing SJP’s proposal to the Investment Committee. The ACIR asserted that the request failed to meet the criteria for actionable measures.
However, Vice President of Finance and Administration David DeSwert clarified to The Sophian that there is “no defined threshold” for taking action and that the ACIR takes “a holistic approach to reviewing the request, and at a minimum, must meet all guidelines.”
DeSwert also mentioned that there is “no specific definition related to our endowment,” when defining what a negligible investment constitutes. He added that “it does mean that it is very small in the context of the Smith endowment and even smaller in relation to total global market value. For example, the endowment is significantly less than 1% invested in weapons manufacturers.” He continued, “It is not easy to divest from specific sectors because of the pooled nature of Smith’s investments.”
Regarding the specifics of Smith’s holdings in these companies, DeSwert said, “The college has no direct investment beyond US treasuries. We select managers of funds and passive index funds that then invest in specific businesses. We do not choose the specific business.”
According to DeSwert, “Excluding specific sectors would limit the managers and funds the college’s endowment could invest in, thereby limiting the ability of the endowment to support the college’s mission.” He continued to explain that “index exposure” is only a temporary placeholder as Smith is working to rebalance their portfolio; “We need to be able to trade in and out of these exposures efficiently. Thus, we want these index exposures to be liquid and low-cost, which we achieve by using exchange-traded funds (ETFs) tracking our benchmark indices.”
In addressing the demand for Smith to pursue impact-free investments, DeSwert noted that there are currently no “ESG-related ETFs with sufficient liquidity for Smith’s purposes.” ESG-related ETFs are exchange-traded funds tailored to incorporate environmental, social and corporate governance considerations into their investment strategies, as per Smith’s requirements.
The Board of Trustees of Smith College, as maintained by DeSwert, “take responsibility seriously as fiduciaries who need to ensure that the endowment supports the college in perpetuity.” As to how completely divesting from these index funds would impact the financial standing of the college, DeSwert answered that “the annual draw from the endowment supports over 40% of the college’s operations. Limiting this revenue would impact the college’s ability to fund financial aid, instruction and student services.”
DeSwert maintained that the ACIR does not consider input from donor groups when making decisions; “however the ACIR looks for demonstrated community consensus in submitted requests (e.g. support from students, staff and faculty).” According to DeSwert, unless materially different information is brought forward, he “would not anticipate that the ACIR would change its decision.” DeSwert mentioned that “it is unlikely … that a request to consider the same topic would be considered between the two-year implementation phase is complete.”
When questioned about Smith’s current stance on refraining from divestment, in contrast to the decision made in 1986 when the trustees promptly divested from corporations not aligned with the Sullivan Principles, he responded, “I cannot speak to the specifics of that divestment decision, but the structure of the college’s (and most other endowments’) investments was different at that time. Endowments then often held stocks directly rather than participating in pooled funds. The structure today makes it difficult to fully divest from a single specific stock or sector.”
On Mar. 30, 2024, President Sarah Willie-Lebreton met with five anonymous members of SJP to discuss their demands. These included the scheduling of an emergency “ACIR and investment committee meeting, full immunity from conduct board for all occupants [of College Hall] and public acknowledgement and investigations for Jim Gray and other passive bystanders to assault that occurred on the 27th.”
SJP publicly shared their notes of the meeting, in which, according to an Instagram post by Smith’s chapter of SJP, President Willie-LeBreton answered that she was “unable” to call for a second meeting of the ACIR, but that she would share the protester’s request with members of the ACIR and ask to “make available members of the investment committee” communicate with protesters.
