Duke University is hypocritical. Despite what the “Bleed Blue, Live Green” stickers stuck to alumni and employee cars may lead you to believe, Duke’s offshore investments have seriously negative environmental impacts – and let it skip out on paying many taxes.
The details of Duke’s wrongdoing came out with the November release of the Paradise Papers, which showed that hundreds of thousands of people and corporations – including Duke – are evading taxes.
In trying to please its diverse group of stakeholders, universities like Duke seem to be stuck between a rock and a hard place. Not sharing how it invests its endowment may simply be the easiest way to avoid conflict with any stakeholder while increasing its endowment. When I was a high school senior, this privacy hid the issue completely; I was much more concerned with Duke’s prestige and opportunities. Yet now, as a student and a stakeholder, maybe it is time that I, and other Duke students, started asking more questions about where our tuition money is being invested. Because there are consequences of some investments that are not worth the extra financial returns.
Duke has used a block corporation registered in Isle of Man, between England and Ireland, as an intermediary to avoid their endowment being taxed, as would typically be required for nonprofit investments. While not illegal, these offshore investments do support a system that allows many companies to hide money and gain from this tax evasion through nondisclosure and rules allowing investors to earn money tax-free. In addition, it legitimizes the nefarious environmental impacts, such as mountain capping, fossil fuel extraction, and deforestation to which these block corporations lead.
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As reported by The New York Times, investment firms with connections to Duke as recently as 2015 held over 2 million shares in Ferrous Resources, an iron mining business in Brazil. Pre-2010, this corporation proposed a 298-mile pipeline to transport iron slurry, mining waste containing iron ore, from the mine to a port for distribution. Concerns about the negative impacts that the pipeline would have on more than 110,000 Brazilians ultimately led to its cancellation.
While Duke was generating revenue from their iron company investments which harmed both Brazilian communities and the environment, Duke was also promoting its sustainable initiative to become carbon neutral by 2024. Perhaps this was created as a “get out of jail free card” to cast Duke as a green school in the event that negative environmental policy, such as an investment in a company building an iron slurry pipeline, should come to light.
Through these environmental initiatives Duke University is playing its role in University Social Responsibility (USR). The idea of USR is like that of Corporate Social Responsibility and has been created as universities have begun seeking more profit and thus become increasingly similar to corporations. USR demonstrates universities and their stakeholders choosing to integrate environmental and social concerns into their operations.
Unfortunately, USR can often be used as a way for universities, even inadvertently, to cash in on their good deeds. Duke University is a solid example of this idea of moral licensing, which states that individuals and entities are more likely to justify doing bad things after they have done something good. After committing to going carbon neutral, Duke University had enough credibility to invest in a Brazilian iron company.
So we can be hopeful: universities like Duke are at least doing some good through their use of USR and efforts to protect their stakeholders when higher education is a capitalist market full of corporations. But universities can still make improvements in how they strive to make more revenue, please a multitude of stakeholders, and make ethical decisions. Even if there is a backlash from students and companies in which they invest, universities should be transparent with their transactions; as a stakeholder, I would like to be able to hold Duke accountable for where it is investing my money.
Perhaps a committee of stakeholders could be established to check in on how they are doing with regards to USR to set goals for further ethical progress.. Also, USR should prioritize real change, not just generate better PR and as a first step in this direction, Duke should work to aid the Brazilian community which Ferrous Resources negatively impacted.
It is hard to see the need for offshore investments going away anytime soon. However, this only underscores the necessity of stakeholders, especially students whose tuition is going into these offshore investments, pressuring universities to publicize their investments so that stakeholders can serve as watchdogs over their hedge funds.
Change is possible, but it must be demanded. Otherwise, Duke and other universities will continue to make dangerous investments to stay relevant and competitive.
While I remain optimistic, I am also disappointed. I had never imagined that my school, along with most other universities, would be just like all the other corporations out there.
Alex Johnson is a first-year Duke student from Raleigh.