Letter: Responsible enough

In a recent column (“For responsible investment,” Feb. 18) Aaron Podolny ’12 asserts that Yale “can do better” when it comes to socially responsible investing. While there is always room for improvement, Podolny understates Yale’s commitment to investing in a way that promotes sustainability and societal good.

In fact, the University and its Investments Office along with its Advisory Committee on Investor Responsibility and its Corporation Committee on Investor Responsibility fully embrace the goal of ensuring that Yale maintains the highest integrity in managing its endowment in a way that is consistent with the highest principles of ethical investing.

Moreover, Yale already engages in the “active ownership” Podolny espouses. For Yale, the most effective means of “active ownership” is direct and open communication with Yale’s large and diverse array of portfolio managers, which is something our Investments Office already does very well. In fact, part of the success of the office is the level of trust and frank dialogue it has with its managers, which is well beyond what many other institutional investors have accomplished or seek to achieve.

Yale actually goes beyond the standards required of the signatories of the United Nations Principles for Responsible Investing in many important respects. The principles are merely advisory and do not ever require the exclusion or screening out of particular companies or sectors. Yale in contrast, does not view divestment as “impractical” and occasionally has both screened certain companies and excluded ones not in line with its principles.

The Investments Office, the Investment Committee of the Corporation (which closely monitors the Investments Office) and the Corporation Committee on Investor Responsibility are sensitive to the University’s ethical investment policies and care deeply about Yale’s reputation as a leader in the field of ethical investing. In my experience, they do not hesitate to voice concern where they believe it appropriate or necessary, nor would they hesitate to direct any particular issue of concern to the ACIR.

This commitment and the number of groups monitoring the Investments Office’s activities makes granting the ACIR the ability to review all holdings unnecessary, at least in my view. And such disclosure would be cumbersome and difficult for the Investments Office and its partners.

I am proud of Yale’s record of ethical investing and eager to continue to work with the Investments Office to achieve our shared goals of fulfilling the University’s commitment to ethical investing, while simultaneously meeting our obligations to the University’s many constituencies, especially the students, staff and faculty, who depend on the endowment for financial support.

Jonathan Macey

Feb. 18

The writer is a 1982 graduate of the Law School, the Sam Harris Professor of Corporate Law, Corporate Finance and Securities Law and the chair of the Advisory Committee for Investor Responsibility. The views expressed in this letter are his and not necessarily those of the ACIR.

Comments

  • Activist

    Thank you, Mr. Macey, for a thoroughly reasonable response to certain activists unreasonableness.

    Just as non-profits are free to apply their ill-gotten index gains for good, so are those Yalies personally and subjectively discomfited by Yale’s investment decisions free to return that percentage of their ill-gotten gains that offends them.

    I know that this thought is a repeat; however, I have not noted–nor do I expect–any Yalies to take this reasonable and voluntary course.