The University of Toronto has become the first university in Canada to eliminate tobacco company investments on ethical grounds.
The decision, bowing to an appeal launched by a group of students, appears to be an unusual step for any Canadian university. Most of the postsecondary institutions contacted yesterday do not have a formal mechanism for considering ethical concerns when making investment decisions.
The March, 2006, petition that prompted the U of T decision was delivered by a group calling itself Education-Bringing Youth Tobacco Truths (E-BUTT). The group requested the institution divest itself of all of its tobacco and tobacco-related stocks and bonds.
Third-year political science and ethics student Tyler Ward, 20, founded E-BUTT in January, 2006, and the group now has 35 members. Mr. Ward said he was spurred to action by his father's death from lung cancer last year -- although his dad didn't contract the disease from smoking.
"I saw firsthand what it was like to experience lung cancer, and I thought if a legal product that was being marketed by an industry had caused my father's illness, I would have been livid," he said.
Mr. Ward said the group came up with the idea after learning about a gift of $150,000 that Imperial Tobacco had given to the University of St. Michael's College at U of T in the late 1990s. "When we discovered this, we wondered if U of T also invested in tobacco stocks and bonds," he said.
The petition eventually reached the upper echelons of the university's administration, where school president David Naylor decided to establish a committee to examine the possibility of complying. It is the only petition to have a committee assigned to it since Dr. Naylor's arrival in November, 2006, university spokesman Rob Steiner said.
The committee recommended the university adopt a policy whereby companies that derive 10 per cent or more of their revenues from tobacco products be divested, along with tobacco stocks that make up 10 per cent or more of pooled funds. The president accepted that recommendation with an official letter to the governing council dated March 26.
As a result, the University of Toronto Asset Management Corp. will now begin divesting itself of roughly $10-million in tobacco stocks immediately.
As of Dec. 31, 2005, the school's investment arm held about $10.5-million of tobacco industry stock, investments that included $4.6-million in Japan Tobacco, $4.5-million in Altria Group Inc., and $1.4-million in Rothmans Inc.
The Rothmans stock will not be divested because it comprises less than 10 per cent of a pool.
The $10.5-million figure comes out of a total equity portfolio of $2.5-billion.
Dr. Naylor declined comment through a spokesman yesterday, but said in a letter to the university's governing council that he had wanted to make the decision without being influenced by his background as a doctor with an interest in cardiovascular disease.
"The president's feeling on this one very specifically was tobacco is a very rare case where there is no social debate and no academic debate around the harmful effects of [it]" Mr. Steiner said. "There's also a body of policies in the university and a body of regulations and laws in the country that already restrict tobacco in a big way. So the combination of those two things made this petition, once it had cleared its hurdles, something we could act on."
U of T is the 24th postsecondary school in North America to divest stocks in the tobacco industry. Harvard, Stanford and Johns Hopkins universities are among leading U.S. schools that have already done so.
But when the U of T group began evaluating the petition, there was no policy to fall back on.
"Our primary responsibility is our fiduciary responsibility to maximize returns on this money because it doesn't belong to us," Mr. Steiner said.
An informal survey of other Canadian universities found that many support U of T's position.
At the University of Calgary, the issue of ethical investing was raised at a recent investment committee meeting, vice-president of finance and services Mike McAdam said.
The committee is now looking into what such a policy would involve.
"The whole issue for us --in terms of what is the right posture and what is the right balance between a pragmatic investment position and a philosophical position -- we're still considering that," he said.
Mr. McAdam said he was unsure whether the university has any holdings in tobacco companies. The university treasurer was unavailable for comment yesterday.
Other universities offered similar responses. Michael Strickland, assistant director of media relations at the University of Waterloo, said he could not easily say whether the university had holdings in tobacco companies. Ryerson University spokeswoman Janet Mowat was also unable to comment on whether the university invests in tobacco companies.
Most institutions contacted did not have a policy on ethical investing. But some have certainly grappled with the subject.
Just last month, Queen's University said it would sell its investments in two Chinese oil companies that it alleges are doing business in the war-ravaged Darfur region of Sudan. The companies "are seen as supporting a government regime that has used its revenues to fund, equip and support genocidal acts in the Darfur region," the university said in a news release.
As in the U of T's tobacco divestment, the Queen's decision to divest followed pressure from Students Taking Action Now Darfur (STAND) Canada.
Mr. Ward said his group's next step will be to persuade the university to shed all its tobacco investments, without qualification. He said the group will talk to economists, accountants and investment lawyers over the course of next fall to determine how officials can potentially divest the Rothmans stock without affecting the rest of the pool.