Official newspaper of The University of Texas at Austin

The Daily Texan

Official newspaper of The University of Texas at Austin

The Daily Texan

Official newspaper of The University of Texas at Austin

The Daily Texan

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October 4, 2022

Social responsibility should be considered when investing

Quinn McGuinness

The University of Texas System is one of the most prominent school systems in the country, with a mission to “improve the human condition in Texas, our nation and our world.” The system boasts the country’s second-largest endowment at $43 billion in 2022. However, despite their mission, the investments of the University of Texas/Texas A&M Investment Management Company (UTIMCO), the company responsible for managing UT’s endowment, lack consideration for human rights and environmental concerns. 

This absence of concern leads them to disregard the varying beliefs of the UT community through their investments in fossil fuels and weapons manufacturing. According to a 2011 statement from Bruce Zimmerman, the former CEO of UTIMCO, the company does not account for “social or political concerns” in its investments. 

UTIMCO’s refusal to consider the harmful impact of its investments shows a lack of social responsibility to the UT community. To mitigate the harm caused by the UT systems, UTIMCO must practice ethical investing and promote financial oversight.

In 2023, Amnesty International published a report that gave the UT systems a failing grade in investment responsibility, human rights due diligence, transparency and environmental, social and governance policy. 

UT was one of only two endowments with the lowest score in the report. According to Page 37 of the report, UTIMCO’s policies did not include any investment mandates for environmental or human rights concerns.

To remain a top university, UT must promote excellence in all areas, including its fiscal policies. UTIMCO’s apathy toward social concerns highlights a neglect of its duty to uphold the high ethical standards expected from the University.

The motto of UT is ‘What starts here changes the world,’” said Thomas Palaima, Robert M. Armstrong Centennial classics professor. “But for the good or ill? … I think that there are many ways in which things that are done around here could be done better.”

Palaima said people have requested a University study on the endowment’s social responsibility for 30 years.

UTIMCO’s lack of concern for the ethics of its finances and failure to provide a report on its investments ignore the concerns of its students, faculty and alumni, who are all stakeholders in UTIMCO’s investments. 

“Higher education institutions are social benefit institutions,” said Nicole Torrico, managing director of the Intentional Endowments Network. “And (they) have a variety of stakeholders that they’re committed to supporting.”

Torrico said institutions must lead by example and “put their best foot forward in relation to how they’re acting and making sure that’s aligning with what they’re teaching.”

In addition to the lack of ethical responsibility, UTIMCO’s insufficient oversight highlights an absence of financial responsibility. 

“(Stock) value is affected by anything that can suddenly devalue them,” said energy law professor David Spence. “As climate changes, more and more properties are subjected to risks that they were not subjected to in the past.”

The economic outcome of UTIMCO’s investments in the oil and gas industry is based on the global cost of oil. With the recent international push away from fossil fuels, UT’s investments pose a more significant financial risk to the institution.

Additionally, the value of UTIMCO’s investments in weapons manufacturing companies decreased by nearly $28 million between 2021 and 2022, a clear sign that these investments are not producing the anticipated economic gain.

UTIMCO was not available for comment.

UTIMCO must make a conscious effort to practice ethical investing that aligns with the values of the UT community. By integrating human rights, environmental concerns and social responsibility into its endowment management, UTIMCO can uphold its ethical responsibility to the University community and society as a whole.

Saunders is a journalism and government freshman from Wheaton, Illinois.

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