Advisory Committee on Investor Responsibility

The Advisory Committee on Investor Responsibility (ACIR), a subcommittee of the Investment Committee of the Board of Trustees, advises the Investment Committee (and, through it, the Board of Trustees) on matters of social responsibility and the Smith College endowment. The ACIR consults with the Investment Committee on social issues relevant to investing and recommends opportunities to better align endowment investments with the college’s mission and values. Advisement from the ACIR recognizes that the endowment is not a tool for responding to global events not explicitly related to the college’s mission and day-to-day operations. The committee will:

• Research, evaluate, and make recommendations to the Investment Committee regarding current issues and trends related to socially responsible investing that arise from either inside or outside the committee
• Consult, as appropriate, with other members of the Smith community to understand and consider the range of viewpoints regarding investor responsibility
• Review, evaluate, and make recommendations regarding proxy voting principles and practices related to environmental and social responsibility and corporate governance

In making its recommendations, the ACIR recognizes that there is no single mechanism for aligning investments with the college’s mission and values, and that not all mechanisms are feasible for all types of investments. As a result, the ACIR may consider a range of approaches, including but not limited to enhanced reporting, targeted communication, impact investing, and divestment.

The ACIR will be chaired by a member of the Investment Committee and will consist of student, faculty, staff, and trustee representatives. The ACIR holds at least one meeting per year, typically in the fall semester, at which the committee reviews its charge, sustainability reporting, proxy voting principles, and the progress of various initiatives.

The following Principles and Guidelines will be used by the ACIR when deliberating proposals regarding social responsibility:

1. Mission Alignment: Alignment with Smith College’s core mission, values, operations, and strategic priorities is the first and primary factor when weighing a request for socially responsible investing. The ACIR may consult with the Committee on Mission and Priorities (CMP) as part of its deliberation of any request. Particular weight will be given to issues that have been deemed to be of strategic importance by existing governance structures or the Board of Trustees.
2. Societal Significance: As part of its mission, the college works to educate students to develop solutions to complex, urgent problems. The focus of issues under consideration must be shown to be significant to society at large and of a nature and scale to cause broad economic, environmental, health or social impact.
3. Societal Impact: The ACIR will consider how each element of a proposal may affect positive social change.
4. Financial Impact: A thorough analysis of potential financial costs and impacts to the college’s endowment and operating budget will be considered with any proposal. The result of these analyses may often serve as a key factor behind any recommendations. Actions must not diminish the ability of the endowment to support college operations, which requires the consideration of any negative impact(s) on the endowment’s risk-adjusted returns.
5. Community Consensus: Proposals must have demonstrated support from a broad cross-section of the Smith community. The committee will seek to understand both supportive and dissenting viewpoints in its deliberations.

If a current Smith community member (faculty, student or staff) wishes to open a formal dialogue with the ACIR about a potential issue of social responsibility and its relation to the endowment, they can submit a proposal to the Board of Trustees. Prior to submitting a proposal, community members are strongly encouraged to educate themselves on the functioning of the endowment (see next section) to better understand the implications of proposed actions and the structures that guide the management of Smith’s endowment.

The purpose of the endowment is to provide significant, stable support for the college’s annual operating budget and to preserve the value of Smith’s assets in order to fund the college’s future activities in perpetuity. Over 40% of the college’s operations is funded from the endowment, supporting key functions and initiatives, such as student financial aid, faculty support, curricular programs, and co-curricular activities.

The Smith College Board of Trustees has a fiduciary responsibility and a legal obligation to act in the best interest of the college and ensure the long-term financial health and sustainability of the endowment. The Board of Trustees delegates oversight and governance of the endowment to the Investment Committee, which engages in strategic thinking and long-term planning regarding the endowment.

The Investments Office implements this strategy and pursues its objectives through equity orientation and diversification, investing with a long-term outlook to provide enduring support to the college’s key initiatives. The Smith endowment generally invests through pooled investment vehicles and commingled funds managed by third-party investment partners, passive index funds, and exchange traded funds (ETFs), rather than direct investments in individual securities. As a result, certain actions, such as divestment, are operationally difficult to undertake and must occur at the asset class or fund manager level, rather than the security level. For this reason, prior to submitting any request to the ACIR, petitioners must review the important resources listed below. All proposals must demonstrate an understanding of this information.

1. Smith’s Investments webpage
2. American Council on Education’s primer, “Understanding College and University Endowments"
3. In addition, the Office of the CFO is available to provide presentations on the endowment to groups or to answer specific questions. Email vp-fa@smith.edu for more information.

A proposal submitted to the ACIR must include the following information and documentation^[1]:

1. Topic Description: A brief overview describing the issue, its relationship to investing, how it is aligned with Smith’s core mission and values, and its societal significance and impact.
2. Smith Community Consensus: Describe the extent of community support for the proposed recommendations. Include information about any endorsements from student, alum, staff or faculty groups, as well as media coverage of the topic specifically in relation to Smith.
3. Sources of Information: List the sources of information used in researching this topic. Please provide copies of documents or links to online sources.
4. Proposed Actions:
   1. Describe the recommendation you would like the ACIR to make to the Investment Committee.
   2. After reviewing the endowment education resources listed above, please explain how this recommendation could be accomplished through Smith’s endowment structure.
   3. Please share suggestions regarding other avenues (beyond Smith’s endowment and investments) for effecting the change you seek.

Once the documentation is received, the ACIR, at its next scheduled meeting, will begin the following process. Petitioners should expect a lengthy process, as it requires that the committee review the documentation, consider it against the principles and guidelines, conduct research, and consult with relevant stakeholders in order to reach a decision that may need to be reviewed by the Investment Committee and the Board of Trustees. This process may extend across academic years. At all steps along the way, the committee will endeavor to keep the petitioner informed of their work:

1. Deliberation: In order to be considered, any proposal must include all of the elements listed above. The ACIR will assess proposals using its Principles and Guidelines. If the committee decides a proposal meets these requirements, they will begin a process of further research and consultation.
2. Recommendations and approval: Based on their research and consultation, the ACIR will decide whether to make recommendations to the Investment Committee for potential action(s). Recommendations to the Investment Committee may necessitate further deliberation and potentially approval by the Investment Committee and the full Board of Trustees.
3. Communication: If the ACIR does not recommend any action on a proposal, the ACIR will endeavor to communicate the/its decision to the petitioner and, when appropriate, the community. If the ACIR recommends any actions to the Investment Committee and then to the Board of Trustees, and those recommendations are accepted, the Board will communicate its decision to the community.
4. Conclusion: Once a decision is made and communicated, there will be a two-year period in which any approved actions will begin to be implemented. During this time period, the ACIR will continue an open dialogue with the Smith community and share any relevant updates. During this two-year period, similar proposals on the same topic will not be considered by the ACIR.