University of Michigan - Divestment from Tobacco Stocks
Public university located in Ann Arbor, Michigan
Enrollment: 24,472 undergraduates
Type/Category: Tobacco Divestment
Program and Background: In June 2000, the
University of Michigan Board of Regents voted to divest from
the University’s stock holdings in tobacco manufacturing
companies. The campaign to divest began in the late 1990s
when a faculty member on the executive committee of the University
of Michigan Faculty Senate Assembly raised the issue. The
executive committee subsequently released a report that spurred
a recommendation to divest by the Faculty Senate. This resolution
was supported by the University of Michigan Student Assembly.
Other student organizations and members of the college community
also opposed the University’s tobacco stock holdings.
As divestment became an increasingly debated topic across
campus, University President Lee Bollinger ordered the formation
of the Ad Hoc Advisory Committee on Tobacco Investments in
September 1999 to explore the University of Michigan’s
tobacco investments more carefully.
A six-month investigation by the Committee on Tobacco Investments
focused on two major questions:
- What features differentiate tobacco industry products
and activities from those of other industries, warranting
divestment from tobacco stocks?
- Does investment in tobacco company stock represent such
a contradiction to the University’s mission that divestment
is ethically necessary?
Other issues taken into account by the Committee included:
- Whether divestment from tobacco would result in a “slippery
slope” of divesting from other companies or industries
whose business ethics could be called into question
- How the Michigan State Legislature might respond to divestment
by a state institution
- Whether University policy dictated that investments be
based solely on financial factors. Notably, a precedent
for divestment on moral and ethical grounds had been set
in 1978 when the Board of Regents voted to divest from companies
operating in South Africa, as a means of opposing apartheid.
The Committee on Tobacco Investments received over 200 emails
regarding tobacco divestment. In numerous public and electronic
forums the community response was overwhelmingly in favor
of divestment. The State Legislature also indicated that they
would not oppose divestment.
The Committee concluded that divestment was warranted based
on the following factors that were in direct contrast to the
University’s educational mission:
- The public health threat posed by tobacco products
- The dishonest actions of the tobacco companies who knowingly
deceive the public about the health risks associated with
tobacco use
- The tobacco industry’s tradition of targeting youth
consumers
Results: The University of Michigan Board
of Regents voted in favor of divestment, which took place
over a period of ten months. The university divested from
a list of companies compiled by The Investor Responsibility
Research Center, a non-profit organization that provides investment
information. The University of Michigan was among the first
major public universities to divest from tobacco stocks.
Contact:
Tom Schneider
Executive Assistant to the Senate Advisory Committee on University
Affairs (SACUA)
tomsch@umich.edu
This case study brief was written in September 2003.
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