When calling for divestment and the adoption of an ethical investment policy at a university, it is firstly vital to know the nature of the university's investments and the way in which the university presents its investment policy. Once we understand a university's level of investment and its investment policy we can begin to analyse and then challenge the economic and moral assumptions they represent.
In the case of UCL we can look at two documents to provide us with crucial information on UCL's current position- these are their Freedom of Information Act response and the Provost's statement on arms investment in his weekly newsletter.
On 9th August 2006, Campaign Against Arms Trade (CAAT) received a reply to their freedom of information act request regarding UCL's arms trade investments. The main points of information it contained are as follows: (NB. UCL's replies are in bold. Comments in red. CAAT enquired about 19 arms companies- included are the two which UCL confirmed they have shares in).
CAAT Freedom of Information request:
From: Mrs R.H. Cummings, Freedom of Information OfficerThese direct shareholdings mean that UCL's total investment is £1,591,627 making it the largest known university investor in the UK. This amounts to 1.7% of its total investment assets.
Please see below for UCL's response to your FOI Request:
1. Please state the value of the University's total investment assets.
£95,229,586 at 31 March 2006
2. Please state the number and value of shares that the University holds directly in each of the following companies as of 31st March 2006:
Cobham 449,750 shares, value £845,530
Smiths Group 75,900 shares, value £746,097
3. Please state the number and value of shares that the University holds indirectly (e.g. in pooled funds) in the companies listed above, as of 31st March 2006.If UCL invests in managed or pooled funds- which we can assume it does- then there is the possibility that some of the money in these funds will be invested in arms companies. So long as UCL prefers not to provide information on this subject- information which they can obtain from the fund managers- there will not be full transparency over their finances.
Unable to identify the information we have.
4. Please say whether you have an ethical investment policy and if so please attach a copy.
Yes: no direct investment in tobacco companies.
Please also see attached document, which is a Resolution from the UCL Council Minutes of 14 June 2006.
Mrs R.H. Cummings
UCL Council Minutes 14 June 2006- Minute 89 on "Ethical Investments".
The resolution states that:
"Resolved on the recommendation of Investments Committee - that UCL's investment policy not restrict investment in the defence industry; and that UCL therefore continue to invest, as and when recommended by UCL investment managers, in defence/arms manufacture companies, subject to the investment managers submitting regular reports to Council, via the Investments Committee, to provide assurances that such companies were operating to appropriate ethical criteria."
From this information it is clear that UCL regards tobacco companies as ethically unacceptable and the defence industry as ethically acceptable in terms of investments. For a further exploration of why this is the case, we can turn to the Provost's statement on arms investments in his November newsletter.
The Provost's Newsletter - Arms investment:
I have had a query from a member of staff in response to a recent press statement from a group calling themselves the Campaign Against Arms Trade, which maintains that UCL currently has investments of £1.591 million in the arms trade. Our investment advisers have now advised me on the actual position. UCL presently holds shares in two companies in the aerospace and defence sector: Cobham, and Smiths Group. None of the other stocks identified by CAAT are held by UCL, and indeed several are not even in the aerospace and defence sector. Both Cobham and Smiths are engaged in wide-ranging engineering and manufacturing activity that includes military-related activity. This is not the same thing as arms trade activity: indeed, much of their activity relates to the UK’s own civil and military defence.So, UCL's line is that Cobham and Smiths are ok to invest in because they engage in civil production, much of which benefits the UK's 'national interest'. To see whether this argument is justifiable and truly representative of these companies, we can examine what their military output is, who they sell it to and how much money they make from it.
As you would expect, UCL takes seriously its ethical responsibilities in investment and takes regular advice on this front. There have been lively debates on the legal framework and principles of ethical investment both on Finance Committee and on the UCL Council over the last year, as a result of which our Investments Sub-Committee now relies upon independent advice from the Ethical Research Investment Service ("EIRiS"). Their advice is that Cobham and Smiths Group are ethically acceptable investments. Both companies clearly have involvement with the supply of strategic parts of weapons systems, but neither manufactures entire weapons systems themselves, and Smiths has a major role in improving civilian security. EIRiS will continue to screen and advise on UCL investments.
Cobham is a multi-national group of companies that is heavily involved in a number of major military aircraft programmes including Eurofighter, the US Joint Strike Fighter and BAE Systems’ Hawk jet. It produces avionics, aircraft and missile components and provides military training and communication equipment. Cobham's flight refuelling equipment facilitated long-range bombing during the Falklands war, the Gulf war, and recent operations in Afghanistan (Cobham plc website). In 2002 Cobham's total military sales were £360million, constituting 49% of their total sales.
Smiths is a wide-ranging group with Aerospace, Medical, Sealing Solutions and Industrial businesses. Though a UK-based company, nearly 50% of its production is in the US, with 29% in the UK, 15% in the rest of Europe and 7% elsewhere. Through its Aerospace business, Smiths is a first-tier supplier to UK and US aircraft and engine manufacturers. Gun pods for Hawk jets, gun-turret actuators for Apache attack helicopters and cockpit control panels for the B-2 bomber, F-16 fighter and the A-10A 'tank-buster' provide a few examples of their products.
In 2002, Smiths received unwelcome attention amid the growing concern over Israeli activities in the Occupied Territories - it was reported by the Guardian that missile trigger systems made by Smiths Group were used in US-made Apache attack helicopters supplied to Israel. However, such revelations are rare - not because Smiths' equipment is not being used by oppressive regimes or in regions of conflict or tension, but because we generally hear only about the company that markets the complete weapons system. Smiths' military involvement is far less widely known than its size merits- its total military sales in 2004 were $1.2bnconstituting 25% of total sales.
With regards to the 'ethical acceptability' of these companies, EIRIS does not make decisions as to whether companies are ethically acceptable or otherwise. Their role, as a company paid by UCL, is to conduct research on companies and provide reports detailing those companies production and behaviour. It is then up to the client i.e. UCL to make a decision from the information provided as to whether a company is 'ethically acceptable.' As such, EIRIS recently wrote to UCL highlighting this 'inaccurate and misleading' element of the Provost's statement.