Background: In 1918, the Carnegie Foundation established Teachers Insurance and Annuity Association (TIAA) to offer a fully funded system of pensions to colleges, universities, and other US nonprofit institutions. In 1952, TIAA created the College Retirement Equities Fund (CREF), the world’s first variable annuity. In the 1970s, TIAA-CREF became one of the first companies to use an extensive portfolio of international stocks as part of its investment strategy.
Today, TIAA-CREF offers a full range of financial services, including retirement plans, IRAs, mutual funds, brokerage services, life insurance, and education savings plans. It sells its products primarily through institutions such as colleges, hospitals, and other not-for-profit organizations, which in turn offer TIAA-CREF products to their employees. Employees who purchase those products thereby become shareholders in TIAA-CREF funds.
TIAA-CREF is a Fortune 100 financial services company and serves 3.7 million active and retired employees participating at more than 15,000 institutions. As of October 2011, it held $440.7 billion in combined assets under management.
TIAA-CREF has more than 7,500 employees and is headquartered in New York City. The organization has major operations in Charlotte, North Carolina, and Denver, Colorado, and maintains more than 70 local offices nationwide.
For the Greater Good: TIAA-CREF claims to be a strong advocate of shareholder rights and a leader in socially responsible investing. TIAA-CREF states that it has a “globally integrated approach [that] seeks to influence positive social change in the countries and communities in which we invest while helping our clients achieve their goal of a safe and secure retirement.”
TIAA CREF’s Socially Responsible Investing (SRI) program is based on three strategies:
- “Social Screening,” which is intended to “[p]rovide competitive returns aligned with investors' values through comprehensively screened investment options that give special consideration to companies’ environmental, social and governance (ESG) records”;
- “Shareholder Advocacy,” the goal of which is to “[p]romote long-term investment value by exercising our shareholder rights to influence the ESG policies of the companies in which we invest across the entire TIAA-CREF portfolio – not just in our socially screened offerings”; and
- “Community Investing,” which is aimed at “[d]eliver[ing] a combination of competitive returns and positive social impact through focused investment programs.”
Investment/Divestment History: TIAA-CREF’s stated commitment to the greater good and advocacy of socially responsible investment – including an interest in influencing companies’ environmental, social, and governance records – provide the platform upon which a number of campaigns over the years have urged it to divest from companies that violate human rights and international law.
South Africa: In 1977, TIAA-CREF issued a statement calling for portfolio companies with subsidiary operations in South Africa to adopt the Sullivan Principles, a corporate code of conduct intended to help pressure the government to end apartheid. TIAA-CREF strengthened its position in 1984, urging portfolio companies to take further steps such as refusing loans to the South African government and refraining from expanding their operations in South Africa. Eventually, the TIAA-CREF boards of trustees voted in 1986 “to urge the total withdrawal of portfolio companies from South Africa as expeditiously as possible.” Similar shareholder resolutions on this issue were filed through the late 1980s, although TIAA-CREF “remained unpersuaded about the virtues of divestment.” In 1989, TIAA-CREF announced a separate Social Choice Account that would not invest in companies with economic ties to South Africa.
Sudan: In January 2010, after engagement efforts failed, TIAA-CREF became the first large US fund to divest tens of millions of dollars from a group of Asian energy companies over human rights concerns in Sudan. Hye-Won Choi, TIAA-CREF's head of corporate governance, said at the time that while the fund “believe[s] engagement is more effective than divestment [...] the situation in Sudan required a different response.”
World Bank Bonds: In 2000, international activist groups including Jubilee South Africa and Brazil's Movement of Landless Workers called for a boycott of World Bank bonds. The worldwide campaign and activist pressure led TIAA-CREF to drop its bonds in November 2002, citing financial reasons.
Adalah-NY joins the growing national campaign asking TIAA-CREF to hear shareholder voices and uphold its professed concern for social and corporate responsibility. TIAA-CREF has taken action in the past when faced with its financial support for human rights violations and we call on it to again take action and end its complicity in Israel’s human rights violations.