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Open Lands, Closed Books

Tuesday, 21 June 2011 05:49 By Kevin Kiley, Inside Higher Ed | Report

A series of reports by the Oakland Institute charge that several prominent American universities -- including Harvard and Vanderbilt Universities and Spelman College -- are investing in hedge funds and companies that are driving African farmers off their land.

The California-based think tank, which focuses on social, economic and environmental issues, is producing a series of reports on how Western entities are investing in land in Africa and the effects of those investments. In the reports, the institute alleges that these investments are increasing price volatility and supply insecurity in the global food chain, and not returning to African nations the benefits that were promised.

The main link the reports establish between Harvard, Vanderbilt and Spelman and land development in Africa is a London-based hedge fund called Emergent Asset Management. While this tie is only mentioned in one corner of one of the reports, it has garnered significant attention and was highlighted in the institute's press release. The company has confirmed that the institutions have invested with it, but none of the universities commented. The reports states that other universities might be making similar investments with different companies.

"Freedom" of the press means little if your news is sponsored by corporate advertisers. Real news needs your support. Click here if you can help.

The reports and their response raise a perennial issue for universities with large endowments invested in diverse places. The complex nature of investing means that colleges and universities, by investing in hedge funds and other pooled investments, could be deciding to invest in a large fund, unaware of all the companies tied to it. Given the pressure on endowment managers to produce healthy returns, there is risk that some funds that have good financial track records may include controversial holdings. Also, because very few institutions openly disclose all of their investments, they run the risk of attracting attention when there are reports about funds with ties to businesses seen as suspect.

The Oakland reports have already generated negative headlines for the universities in foreign and domestic media. The Guardian ran an article titled "US universities in Africa 'land grab' " that has been picked up by multiple news outlets.

Investing in African agriculture has become a hot topic of conversation among investors, earning a spot at the World Agriculture Investment Conference. Proponents of the practice argue that land can be purchased cheaply for high returns and that investing in agriculture in a part of the world that often struggles with food security can help create jobs and feed people.

Emergent -- the company tied to several American universities -- purchases and develops agricultural land to produce products for export, according to a briefing paper by Oakland.

The Guardian article quoted a spokesman for Emergent saying, "We are investing in African agriculture and setting up businesses and employing people. We are doing it in a responsible way.… The amounts are large. They can be hundreds of millions of dollars. This is not land grabbing. We want to make the land more valuable. Being big makes an impact, economies of scale can be more productive."

The report argues that that is not always the case. "These largely unregulated land purchases are resulting in virtually none of the promised benefits for native populations, but instead are forcing millions of small farmers off ancestral lands and small, local food farms in order to make room for export commodities, including biofuels and cut flowers," states a press release that Oakland put out. In an interview Anuradha Mittal, Oakland's executive director, said the group tried to find an example of a company that was improving the area but could not find one.

Officials with the institute said their intention is not to scold or shame the universities, but to provide a clearer picture of what is happening with the land in Africa that some institutions are or could be considering investing in. Mittal said there has been very little exploration of how companies have gone about purchasing and developing land, and the conditions of laborers at these farms. "This is a risky sector," Mittal said. "You don't know what the response on the ground in Africa is going to be. This is a field where there is a lack of regulation. Do you really want to sink your endowment in something which could end up being really problematic?"

The charge that universities are investing in companies with unsavory practices is nothing new. Management companies and foundations tied to universities are often charged with seeking the highest return on investment possible, and the social, environmental, and cultural effects of the investments they make are secondary factors or not considered at all. Most also have policies not to comment on their investments. Vanderbilt, Harvard, and Spelman all declined to comment because of their policies.

Many colleges and universities sold holdings in companies doing business in South Africa prior to the fall of apartheid. But many institutions have resisted other pushes to sell holdings for political reasons. For example, while activists have urged colleges to sell holdings in companies that do business in Israel, the institutions have not done so.

In 2005 and 2006, however, several colleges and universities, led by Harvard, divested from companies in Sudan that had documented ties to the genocide being committed there.

In recent years, groups have begun arguing that investments that ignore environmental, social, and corporate governance principles can actually be risky in the long term. They have begun developing guidelines to steer institutions away from such investments.

Ken Redd, director of research and policy analysis for the National Association of College and University Business Officers, said that about 15 percent of endowments have socially responsible investment screens. But investments such as mutual and hedge funds that pool assets can often make it difficult for an institution to determine exactly what it is investing in, he added.


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Open Lands, Closed Books

Tuesday, 21 June 2011 05:49 By Kevin Kiley, Inside Higher Ed | Report

A series of reports by the Oakland Institute charge that several prominent American universities -- including Harvard and Vanderbilt Universities and Spelman College -- are investing in hedge funds and companies that are driving African farmers off their land.

The California-based think tank, which focuses on social, economic and environmental issues, is producing a series of reports on how Western entities are investing in land in Africa and the effects of those investments. In the reports, the institute alleges that these investments are increasing price volatility and supply insecurity in the global food chain, and not returning to African nations the benefits that were promised.

The main link the reports establish between Harvard, Vanderbilt and Spelman and land development in Africa is a London-based hedge fund called Emergent Asset Management. While this tie is only mentioned in one corner of one of the reports, it has garnered significant attention and was highlighted in the institute's press release. The company has confirmed that the institutions have invested with it, but none of the universities commented. The reports states that other universities might be making similar investments with different companies.

"Freedom" of the press means little if your news is sponsored by corporate advertisers. Real news needs your support. Click here if you can help.

The reports and their response raise a perennial issue for universities with large endowments invested in diverse places. The complex nature of investing means that colleges and universities, by investing in hedge funds and other pooled investments, could be deciding to invest in a large fund, unaware of all the companies tied to it. Given the pressure on endowment managers to produce healthy returns, there is risk that some funds that have good financial track records may include controversial holdings. Also, because very few institutions openly disclose all of their investments, they run the risk of attracting attention when there are reports about funds with ties to businesses seen as suspect.

The Oakland reports have already generated negative headlines for the universities in foreign and domestic media. The Guardian ran an article titled "US universities in Africa 'land grab' " that has been picked up by multiple news outlets.

Investing in African agriculture has become a hot topic of conversation among investors, earning a spot at the World Agriculture Investment Conference. Proponents of the practice argue that land can be purchased cheaply for high returns and that investing in agriculture in a part of the world that often struggles with food security can help create jobs and feed people.

Emergent -- the company tied to several American universities -- purchases and develops agricultural land to produce products for export, according to a briefing paper by Oakland.

The Guardian article quoted a spokesman for Emergent saying, "We are investing in African agriculture and setting up businesses and employing people. We are doing it in a responsible way.… The amounts are large. They can be hundreds of millions of dollars. This is not land grabbing. We want to make the land more valuable. Being big makes an impact, economies of scale can be more productive."

The report argues that that is not always the case. "These largely unregulated land purchases are resulting in virtually none of the promised benefits for native populations, but instead are forcing millions of small farmers off ancestral lands and small, local food farms in order to make room for export commodities, including biofuels and cut flowers," states a press release that Oakland put out. In an interview Anuradha Mittal, Oakland's executive director, said the group tried to find an example of a company that was improving the area but could not find one.

Officials with the institute said their intention is not to scold or shame the universities, but to provide a clearer picture of what is happening with the land in Africa that some institutions are or could be considering investing in. Mittal said there has been very little exploration of how companies have gone about purchasing and developing land, and the conditions of laborers at these farms. "This is a risky sector," Mittal said. "You don't know what the response on the ground in Africa is going to be. This is a field where there is a lack of regulation. Do you really want to sink your endowment in something which could end up being really problematic?"

The charge that universities are investing in companies with unsavory practices is nothing new. Management companies and foundations tied to universities are often charged with seeking the highest return on investment possible, and the social, environmental, and cultural effects of the investments they make are secondary factors or not considered at all. Most also have policies not to comment on their investments. Vanderbilt, Harvard, and Spelman all declined to comment because of their policies.

Many colleges and universities sold holdings in companies doing business in South Africa prior to the fall of apartheid. But many institutions have resisted other pushes to sell holdings for political reasons. For example, while activists have urged colleges to sell holdings in companies that do business in Israel, the institutions have not done so.

In 2005 and 2006, however, several colleges and universities, led by Harvard, divested from companies in Sudan that had documented ties to the genocide being committed there.

In recent years, groups have begun arguing that investments that ignore environmental, social, and corporate governance principles can actually be risky in the long term. They have begun developing guidelines to steer institutions away from such investments.

Ken Redd, director of research and policy analysis for the National Association of College and University Business Officers, said that about 15 percent of endowments have socially responsible investment screens. But investments such as mutual and hedge funds that pool assets can often make it difficult for an institution to determine exactly what it is investing in, he added.


Hide Comments

blog comments powered by Disqus