A group of students lashed out at the administration on Tuesday and questioned the ethics of University investments during Chief Investment Officer David Swensen’s stewardship of the now-$12.7 billion endowment — suggesting that skeletons lie in Yale’s closet beside previously acknowledged investments in corporations that supported South African apartheid.
Possible investments in the government of Sudan were the primary concern aired by some students during the annual open meeting of the Yale Advisory Committee on Investor Responsibility held at the School of Management. Approximately 30 members of the Yale community attended the meeting, including Swensen and the eight ACIR members. Two student presentations outlined problems in the Sudanese region of Darfur, as well as a handful of corporate interests that may violate the committee’s guidelines for ethical investing.
While one presentation focused on the screening policy for investments, the other one — led by members of several campus activist groups — was more critical of current University investments and called for across-the-board investment disclosure.
“We are extremely concerned about the lack of information available on Yale’s investments. Yale’s investments has the potential to be a force for good in the world, and we would like it to be another area in which we are proud of Yale,” said Sam Landenwitsch ’06, one of the presenters for the group that was composed of members of the Undergraduate Organizing Committee, the Yale Student Environmental Coalition, the Sustainable Investment Group and the Graduate Employees and Students Organization.
Swensen responded by saying that Yale’s investment managers are “highly ethical,” and regularly place the University’s perspective above their own profit-maximizing interests.
“When I talk about people we look for as partners with the University, I talk about the kind of Boy Scout characteristics … and ethical investing is very high up on the list,” Swensen said.
ACIR chair Geert Rouwenhorst, a professor at the SOM, said his committee uses the criteria established by a 1969 book called “The Ethical Investor” that was written by several Yale professors to address community concerns about the University’s investments. The committee uses those guidelines to advise the Yale Corporation Committee on Investor Responsibility.
“It outlines areas in which we as an institution would like to deviate from the maximum return principle,” Rouwenhorst said.
Over the past decade, Yale’s returns on its endowment have ranked in the top 1 percent of institutional funds, but the majority of its investments are managed privately and thus not revealed publicly. During Tuesday’s meeting, committee member Michael Gousgounis ’06 said Yale’s public investments comprise no more than 5 percent of its portfolio.
Some students asked for greater disclosure of University investments and the names of private investment managers, but Swensen said Yale’s market success is largely dependent on secrecy.
“I made the decision a long time ago that Yale wouldn’t publish a list of its managers,” Swensen said. “We work very hard … trying to stay out of the mainstream. We have a problem as it is with other institutions riding our coattails, and that problem would only be exacerbated if we published a list of manager relationships.”
Still, the presenters said any Yale investments in companies with Sudanese ties should be revealed and terminated because of that government’s support of violence against its non-Arab citizens.
“This issue is just as pressing as it was last April,” said Nick Robinson LAW ’06, of the Lowenstein International Human Rights Clinic. “Yale has an opportunity now to become a leader of a popular movement to make things better for people in Sudan, and I would hope that the committee acts on that.”
Rouwenhorst requested more information from Robinson and his co-presenter, Hillary Forden LAW ’05, and invited the two students to work with the committee on the issue. Robinson said one of his primary goals is to develop a blacklist of companies with ties to the Sudanese government, including Petrochina, a significant Harvard University interest.
Landenwitsch cited the natural-gas miner Compton Petroleum Corporation, the lead-smelting company Zinifex, and Niko Resources, which also mines natural gas, as substantial Yale investments whose activities are suspect. He said Yale should emulate Columbia University, where investment officials are working to consistently list the university’s public equity holdings and private equity managers.
Some ACIR members said the corporations that Landenwitsch highlighted have submitted to government regulation and do not deserve to be blacklisted.
“It’s very different from apartheid,” committee member Scott Junkin ’68 said. “I don’t know how we determine that you’re right and they’re wrong. It takes a lot of research. We’re trusting in the regulation process, since when looking for evidence of wrongdoing we sort of came up empty-handed.”
But some students argued that Yale should take a more active role in overseeing its investments around the world.
“This isn’t about the University being some kind of police to run in when the government fails — it’s to know whether there could be social harm done with Yale’s money,” UOC member Phoebe Rounds ’07 said. “Since research was done on apartheid, what’s stopping the committee from researching this?”
Junkin said the University’s 4,000-investment portfolio places constraints on the amount of attention the committee can devote to individual investments, and called on the presenters to offer more concrete solutions.
The University’s past divestments have resulted from concerns about legal violations, Swensen said. In South Africa, for example, the blacklisted oil companies were violating an international oil embargo.