University Investment Office officials gave an overview of the University’s endowment, the responsibilities of the Office in managing the endowment and past decisions regarding divestment at a Thursday town hall hosted by the Undergraduate Council of Students.
They then opened the meeting to questions from an audience of approximately 70 students and community members, with discussion focused largely on divestment amid amplified scrutiny of the University’s alleged financial ties to Israel.
In recent weeks, multiple student groups have called for the University to divest from companies affiliated with Israel and the Israeli military, The Herald previously reported. At a Monday evening vigil for Hisham Awartani ’25 — one of three Palestinian students who was shot last weekend in a potential hate crime — protesters chanted “Brown divest” and hung pro-divestment banners as the crowd shouted President Christina Paxson P’19 P’MD’20 off the microphone.
During the UCS town hall, Chief Investment Officer Jane Dietze and Investment Office Managing Director Peter Levine emphasized that the University has no direct investments in defense manufacturers and that the endowment’s only potential ties to the industry are through broader funds and indices.
Just 4% of the University’s endowment comprises directly owned, publicly traded securities, according to the presentation. The seven securities included in this category, which the University must report publicly in accordance with SEC regulations, include asset managers, exchange-traded funds and psychedelic-assisted therapy companies.
The remainder of the non-cash portion of the endowment is invested in external management services “across multiple asset classes,” which the Investment Office tends to prefer for their expertise in specific industries, Office officials said in an interview with The Herald.
The Investment Office does not publicly disclose which managers it invests in and is contractually barred from providing specific details about the content of those managers’ portfolios. This discretion is necessary to maintain a competitive market advantage, representatives from the Investment Office said.
Dietze and Levine said calls for divestment make little sense with regard to an endowment that holds just seven individual public securities — none of which have direct ties to Israel — and in which managers focusing on the defense industry are absent from the University's portfolio.
“We are not going to actively or directly invest in any weapons manufacturers, arms manufacturers or defense contractors,” Dietze said. One presentation slide stated that “the Investment Office invests with managers whose values are aligned with the Brown community.”
Only twice in recent history has the University passed full, official divestment resolutions, which call for the University and any separate account investment managers to remove direct investments from specific companies.
Brown divested from “companies dealing in tobacco” in 2003. Three years later, it divested from six companies involved in “genocidal actions and human rights violations in Darfur,” according to a University press release.
In accordance with the University’s standard procedure for divestment decisions, both of those resolutions began as recommendations from the Advisory Committee on Corporate Responsibility in Investment Policies. The committee delivered the recommendations to then-President Ruth Simmons, who brought them to the Corporation, the University’s highest governing body, for a vote.
In 2020, the University announced that it had sold 90% of its fossil fuel investments, and would jettison the remainder “as it becomes possible to do so.” But in contrast to the 2003 and 2006 cases, the Corporation never voted on divestment.
Instead, the decision came from within the Investment Office after the team grew concerned about “stranded assets” and the volatility of oil and gas prices, Dietze said in an interview with The Herald.
“It fits in nicely to our worldview that climate change is real and we want to be part of the solution, not the problem,” Dietze said. “But the reality is, we just don’t want to be invested in that stuff — it’s a bad investment.”
“No one told us to go sell this, but the end result was the same,” Levine added. Currently, 0.2% of the endowment has oil and gas exposure, compared to an average of 5.6% among Ivy League peers, according to presentation slides at the UCS event.
The University did not initially publicize the decision to sell its fossil fuel assets, an example of the distinction between the Corporation’s official investment decisions, made on an explicitly ethical basis, and the actions of an Office that, in Dietze’s words, is “supposed to make only financial decisions.”
But Dietze said that ethics did play some part in its holdings.
“There are things that we’ve seen that would be good investments, but they would be super icky,” Dietze said. In a separate interview with The Herald, she listed pornography and companies that exploit child labor as examples of investments that the University would not consider as a matter of principle.
The Office “has been actively incorporating (Environment, Social and Governance) considerations” for more than a decade, according to the presentation. The University provides “a statement of philosophy” explaining the University’s standards for investment to “new managers or existing managers with new funds.”
Reflecting the office’s two prior divestment resolutions, the statement requests that managers refrain from investing in companies associated with the Darfur genocide and tobacco manufacturers, as well as a general charge to “take into account ESG considerations.”
In January 2020, ACCRIP recommended that the University divest from “companies that facilitate the occupation of Palestinian territory,” according to a report by the committee. Boeing, General Electric and Raytheon were among the 11 companies “identified for divestment.”
In March 2021, Paxson acknowledged the report and wrote that she had chosen not to present it to the Corporation for a vote. “In my view, the recommendation did not adequately address the requirements for rigorous analysis and research as laid out in ACCRIP’s charge, nor was there the requisite level of specificity in regard to divestment,” Paxson wrote in a letter to the Advisory Committee on University Resources Management, which succeeded ACCRIP.
When asked about the decision not to bring a divestment vote to the Corporation, Dietze emphasized that it rested with Paxson, not the Office.
At the town hall, multiple students asked how the Investment Office’s claims that the endowment is not invested in defense manufacturers could be verified given that the Office does not disclose its external managers and their holdings.
“There’s no clear screen for those managers,” one student said, expressing concern that the Investment Office was not accountable to community members.
Dietze responded that the Office is accountable “to the Investment Committee, which then reports to the Corporation.” The Committee on Investment “comprises 21 experienced professionals with diverse backgrounds in finance and investments,” according to the Investment Office’s website. Members are appointed by the Corporation.
“I understand your frustration,” she added. “It does resonate with me … but you do need to trust us, and that is difficult — particularly if you don’t know us.”
For some students, accountability to the Corporation was less than reassuring. “We have voting board members who do have direct ties to Textron,” one student said. “Doesn’t that cloud the waters a bit for how we’re able to say we’re not supporting weapons companies and investment into weaponry?”
Maria Zuber MSc’83 PhD’86 P’11, a trustee of the Corporation, has served on the board of directors for Textron since 2016. Textron’s operations include defense and aerospace manufacturing for the Department of Defense, and the Israeli military arsenal includes aircraft manufactured by Textron’s subsidiaries. The multi-industry company has faced criticism from community members at the University and the Rhode Island School of Design in the past three weeks, including multiple protests against its ties to each school and Israel.
Levine referred to “a very strong conflict of interest policy with respect to Investment Committee members, our Corporation and what we can invest in,” which precludes the Office from investing in companies that employ members of the Investment Committee.
The last student to speak in the Q&A session returned to the question of ethical considerations in investment decisions.
“It seemed like there was a very open and important conversation about climate change being a social harm that the investment managers wanted to intervene in,” the student said. “Is there a Palestine exception?”
“We did a lot of research (on fossil fuels), and financially we understood that it was going to be a bad investment,” Dietze said, before the student interjected that Dietze had previously referenced both ethical and financial concerns.
The difference, Dietze said, was that “we actually did own a lot of oil and gas. We had funds that specifically extracted oil and gas, and we owned a bunch of it, and we could sell it.”
“We don’t own a bunch of these defense contractors," she said. “We don’t have any of these things we can sell.”
When the University divested from tobacco, the University’s “separate account managers directly (invested) 14.7% of the endowment portfolio,” and tobacco manufacturers made up 0.2% of this direct investment, according to ACCRIP’s recommendation. The report continued that “while the exclusion recommended here may have significant symbolic value, at this time it will have no discernible effect on earnings on the endowment.”
With additional reporting by Neil Mehta
Charlie Clynes is the managing editor of digital content and technology on The Herald's 134th Editorial Board. Previously, he covered University Hall and the graduate labor organization as a University News editor. A concentrator in history and applied math, he loves geography quizzes and has strong opinions about chalk.