Ethical Considerations in Andover’s Investment Activities As approved by the Board of Trustees – January 2008 The purpose of the Endowment funds is to support the operations of Phillips Academy. Funds are invested with a single objective, to maximize the return on those funds while taking prudent risk. Diversion of funds from this purpose to other purposes may not be consistent with the intent of the original donor.
The obligation of the trustees as
fiduciaries of funds designated to support the operations of the Academy cannot be superseded by any other objective. From time to time, however, ethical questions may arise regarding the actions of a company or government in which the Endowment is a shareholder. We believe it is important Andover be prepared to respond in such cases. In instances where such actions are deemed to constitute grave social injury, divestment from the securities of such company or country may be appropriate where possible. The Investment Office will make all reasonable efforts to be informed of such situations and to inform the Board of Trustees as they occur.
Any action regarding these investments, however, must be
subject to the overriding fiduciary responsibility of the trustees regarding funds in the Endowment. Therefore, the ultimate decision regarding divestment or other investment actions taken for ethical reasons other than financial reasons must be approved by the Board of Trustees or a subset designated by them. In cases where the Board of Trustees or their designees determine that grave social injury is occurring and that financial investment in these companies or countries is fundamentally at odds with the values of the Academy, the Board may then direct the Investment Office to make all efforts to divest from such companies or countries, recognizing that there may be commingled investment vehicles in which the Academy is invested and which may prevent the Academy from exercising discretion over its pro-rata share of assets. The Investment Office may rely on the judgment of other qualified Investment Officers in formulating a list of companies from which to divest. Should the Board adopt a resolution to divest from a company or country, the investment office will undertake to: 1. Identify all current direct or indirect ownership of securities issued by the designated countries or companies. 2. Inform all current managers in writing of the Academy’s desire to divest from the identified companies and retain records of the responses of all managers. 3. Report back to the Trustees on efforts to divest, summarizing all holdings and making recommendations regarding any holdings over which the Investment Office may have limited or no direct control. All such actions will be documented in the minutes of the Investment Committee and the Board and will be available for public dissemination.
Additional actions short of divestment could be appropriate in certain situations. Such actions could include any or all of the following: proxy voting of shares in such entities that are held directly by the Academy, direct communication with management of such companies by the Investment Office on behalf of the Academy in an effort to modify behavior, and communication with investment managers regarding their holdings of offending entities in an effort to modify their behavior. In such cases, the Investment Office may act with the advice and consent of the Treasurer, the CFO and the Investment Committee.