“The application of negative injunctions, to be sure, will not rebuild cities or make deserts bloom,” The Ethical Investor, Yale’s guidelines for investment, reads. “But it can limit or halt the destruction of life, of opportunity and of beauty.”

Today, we face falling cities and drier deserts, demolished homes and ruined lives. And Yale, with its institutional power and endowment, can help to limit these injuries. This week, the student body must vote to divest from the worst fossil fuel companies.

The goal of Yale’s divestment is symbolic: It will have an almost negligible financial impact on the fossil fuel companies. But since only eight other colleges — whose combined endowment amounts to about a hundredth of Yale’s — have divested, our decision to divest will open up a social space for other institutions to follow suit. Humanity needs to make strides away from fossil fuels as much as we need to use fossil fuels for the immediate future.

While Brown and Harvard’s administrators have rejected divestment proposals, Yale’s administrators have no reason to follow their lead. Our plan is much more conservative. A vote to divest would mean to follow Fossil Free Yale’s proposal, which sets a timeframe allowing companies to disclose and enact a plan to reduce emissions — and most importantly, only targets the worst carbon emitters among the top 200 list.

Under The Ethical Investor’s guidelines, Yale must divest when our investments are causing “grave social injury.” The University’s responsibility is determined by four criteria: need, proximity, capability and last resort. In the 1970s, the University fulfilled this responsibility by divesting from companies engaging with apartheid South Africa, and in 2006 from Sudanese government bonds and seven oil companies operating there.

Climate change is less visually disturbing than political violence. But as the recent Typhoon Haiyan can attest, it is inflicting real injury on human lives. About 500,000 humans die each year from the effects of climate change, particularly those living in the globe’s most vulnerable communities. There is a clear need for action.

Divestment also fulfills the other three criteria — and a practical function. We are in a unique position to pioneer a new front on an existing powerful environmental movement.

Contrary to popular belief, divestment will have minimal impact on the endowment. A key study by Aperio Group conservatively estimates a loss of less than a standard deviation in their model.

Neither will divestment politicize our endowment. Divesting is an acknowledgement of the scientifically proven link between carbon emissions and climate change, not an endorsement of policy. There is a difference between a negative injunction and a positive duty; we are not promoting sponsorship of green companies.

It is rightly concerning that we are focusing on fossil fuels while our University may be investing in companies — tobacco, firearm, Congolese minerals — that more clearly constitute damage. As a result, we wish there were a mechanism to regularly review the social harm of all the businesses in which we invest.

But inaction on other issues does not preclude us from acting, in this instance, to right a wrong.

In an opportunity that hinges on 50 percent turnout, to squander an opportunity to vote — and to lead this movement at such a critical juncture — would be a disappointing failure on our part.

  • meep15

    If we divest on this issue, I can guarantee that there will be forces calling for divestments in others (we always need a banner to rally behind).

    I’ll happily divest if and when financial advice tells me to do so (for Yale, when David Swensen indicates it’s necessary).
    Though I fall into personal anecdote here, one of my uncle’s colleagues “divested” his funds from Monsanto during the height of the GM-food backlash, simply because he thought it was harmful etc (I’m not entirely sure of the reasons). I don’t think he realised that without Monsanto’s (et al.) contribution to the world, about 1/3 of our population would be starving (full disclosure, I’m a bit biased because my uncle’s holdings thereof netted him a decent sum).

    Perhaps the only reason “climate change” is affecting us so much is that there are simply more bloody people for *natural* events to impact.

    As to the arrogant hubris that human’s insignificant “blip” of time on this planet can destroy it? To quote Michael Crichton, one of my favourite authors, “Earth has survived everything in its time. It will certainly survive us.”

    EDIT: Also the line “The goal of Yale’s divestment is symbolic” is precisely why I have already voted against this. I don’t want Yale’s endowment to become a political tool; that’s what we have politicians for.

    • uniteyale

      Forget destroying the planet, we’re destroying our ability as human beings to live and survive here. Is that not worth something?

      • meep15

        Not really…humans too are pretty resilient (that is, we have adapted to change and evolutionary stress before, and I expect we will continue to do so)

        • uniteyale

          We may not be resilient enough… that’s why hundreds of thousands of people are dying because of climate change’s impacts…

          • meep15

            Millions of people died as a result of the Black Plague…should Europeans have stopped trade with China at that time? Nature will always kill people.

        • MRB

          So you’re actively endorsing environmental degradation that could lead to the deaths of millions (maybe billions over time) and severely degrade the quality of life for those who survive? I don’t doubt that we’ll make it, but I think it’s pretty rich to say we shouldn’t do whatever we can to prevent it just because we’ll adapt and evolve to the new environment that we created.

          • meep15

            The oxygen revolution led to billions of deaths (of anaerobes, but at that point they were the pinnacle of life)…no-one is complaining now.

        • guest

          This argument is so ivory-tower, it makes me sick.

          Malaria incidences in developing countries are already increasing geometrically because of warmer temperature. Crop yields are decreasing in countries near the equatorial band for the same reason.

          Climate change, based on the overwhelming preponderance of scientific evidence, is causing large scale human death right now.

          But it’s okay, right, because humans will “adapt to change and evolutionary stress!”

          Jesus Christ.

          • meep15

            Nature, by virtue of its existence and our population growth, will cause large-scale human death no matter what. Innovation (vaccines, increasing food output via GM foods, etc) tries to stay one step ahead of the dangers humans face.

            I hardly think that divesting from fossil fuels will help the developing world; rather, I think bright people with big ideas will. If that’s “ivory-tower” so be it.

            P.S. One hypothesis for the incidence of sickle-cell anaemia in malaria areas is that the heterozygous form confers some immunity…possibly an example of human genetic change?

        • yalengineer

          I’m with meep15. Yale is much more effective focusing on developing methods to combat global warming, climate change, and the symptoms of climate change like malaria and deforestation.

          Yale is in the position to do a lot of things for climate change. However, its financial impact is largely overrated as well as its political clout with that money.

          • meep15

            Thank you. I agree that our clout would not have an appreciable impact.

            Perhaps Yale could “earmark” gains from holdings in “dirty” companies to go to developing such methods. Not only would this provide an incentive to innovation on our end, but it would show fossil-fuel companies that we need more research in “cleaner energies”

    • minhalexnguyen

      “I don’t want Yale’s endowment to become a political tool; that’s what we have politicians for.”

      1) How are the politicians doing on this front?
      2) Yale has divested TWICE already in the past. It is still not a political tool.

      • Guest

        They’re doing great. Look at the congressional bills advocating for the expansion of MLP’s to the renewable industry. The energy sector is HUGE. It takes time to develop the infrastructure and transition to renewable resources.

      • meep15

        1. Quite well as a matter of fact. Recent debates about the Keystone pipeline, increased regulations/restrictions on fossil fuel companies, policies that spur innovation and development of “clean” energy seem to indicate that.

        2. Yes, but I think one major point people are missing is that this is quite literally a last ditch resort. To quote a contemporary article from the Darfur divestment, “The Yale Corporation’s policy on ethical investments calls for divestment…when the prospect of changing that behavior through engagement or dialogue would be nil.” (emph. added, source: http://www.law.yale.edu/news/1673.htm). Likewise, a summary piece on the apartheid divestment stated that divestment was not immediate; rather, it was as result of companies not abiding by the Sullivan Principles, and after many other schools and companies also divested.

        Thus, I would much prefer opening dialogue with these companies before divesting.

  • theantiyale

    “In the 1970s, the University fulfilled this responsibility
    by divesting from companies engaging with apartheid South Africa, “

    ” SOME ” :


  • minhalexnguyen

    Bravo, YDN. Incredibly, incredibly well-done, FFY. Now go out and vote, Yale.


  • phantomllama

    “Neither will divestment politicize our endowment.”

    “We wish there were a mechanism to regularly review the social harm of all the businesses in which we invest.”
    Yeah, because there’s absolutely no contradiction between those two statements, YDN.

  • Guest

    “need, proximity, capability and last resort”

    I would love someone to explain how divestment is a “last resort”. It seems there are other, better mechanisms at play that would take priority over divestment. Shareholder activism for one.

    Everyone needs to stop quoting Aperio group’s research. Those numbers are based on passively invested portfolios and are based off of indexed investments– best suited for municipal pensions or small sized endowments. Yale employs active management strategies. The losses are much bigger for Yale then Aperio suggests. Yale runs a 39 million dollar deficit, even a single standard deviation return change on our endowment returns could increase that deficit to a power of 10. That means cuts in research, staff hirings, facility operations, etc. No, not likely financial aid, but a whole ton of other services. To close past budget deficits, Yale has employed tactics as wide as, “cutting staff, freezing salaries for deans and officers, reducing the number of graduate students — even turning down all thermostats to 68 degrees.” -NY Times 2010

    The reality is that those against divestment are not global warming deniers. We all agree that scientific evidence suggests climate change is happening. There are just way more productive ways to combat global warming on Yale’s part. Starting YCEI was a good start, increasing fellowships and scholarships for research is another, working productively with the private sector to spur internal change is a possibility. Rather than framing the debate negatively and cutting investments, frame it positively and increase resources for change. Just don’t equate those opposing divestment to those who deny climate change. it’s not the same thing. The risks of divestment ARE real.

    I guess I can rest easy. Even if the YCC referendum passes, there is a zero percent chance the Yale corporation passes it. They’re aware of these things, even if campus rhetoric choses to ignore them.

    • phantomllama

      Great comment. The other ironic point is that the Aperio research doesn’t even reach a conclusion in favour of divestment, but rather points to powerful arguments on both sides.

      Here’s the summary paragraph:

      “In deciding whether to implement any divestment, university endowments face compelling arguments on both sides. From the advocates of divestment, endowments hear about the serious environmental damage already incurred, the frightening trajectory of the math and the benefit from taking a public stance on a critical ethical issue. From the skeptics they hear that screening will adversely affect risk and return and that the goal of any endowment should be to focus exclusively on returns. The math shown in Tables 1 and 2 does support the skeptics’ view that screening negatively affects a portfolio’s risk and return, but it also shows that the impact may be far less significant than presumed. It’s beyond the scope of this paper to judge whether endowments should implement or avoid screening, but anyone on an endowment board facing that decision should at least do the math, in this case the investment math.”

      Key words there: “The math shown in Tables 1 and 2 does support the skeptics’ view that screening negatively affects a portfolio’s risk and return”

      As the post above notes, even a standard deviation sized decrease in returns would massively increase Yale’s deficit.

    • MRB

      We tried those strategies. The largest so called “energy companies,” take BP for an example, sold their renewable projects years ago. Instead of pursuing new projects, they have decided to stick to 20th century technologies and business models. We need something different, and as the YDN endorsement states, we are indeed in a unique position to affect change.

    • Guest

      The risks of divestment are real, but this situation is URGENT. Everything we’re doing and not doing at this point is risky, because we have put ourselves in this risky situation, but making risky decisions we somehow believed would be better overall (plundering the earth and becoming dependent on said destruction). We do not have time to sit around and wait for fellowships and scholarships and conversations about what we should do and how we should do it. FFY is an impassioned group of students that see an opportunity to change, know the risks involved in not doing anything, and want to see a better future. You can’t indict that.

      • Nick Geiser

        “FFY is an impassioned group of students that see an opportunity to change, know the risks involved in not doing anything, and want to see a better future. You can’t indict that.”

        Yes, I can. Why should we judge FFY exclusively by their intentions rather than the (unintended) consequences of their ideas?

    • Guest

      Hey, glad you asked! Here’s an explanation of how divestment is a last resort, and how the FFY proposal asks the University to use shareholder engagement before considering divestment! Check out the table of contents – I know it’s a long report! http://fossilfreeyale.files.wordpress.com/2013/02/ffy-proposal3.pdf

    • ilovelovedontyou

      Hey, glad you asked! Here’s an explanation of how divestment is a last resort, and how the FFY proposal asks the University to use shareholder engagement before it would divest! Use the table of contents – I know it’s long! http://fossilfreeyale.files.wordpress.com/2013/02/ffy-proposal3.pdf

      • Guest

        Thank you, I’ve read this report already. It was very productive of you to dismiss the fundamental arguments against divestment with a “they must just not be reading the report”. I have read the report, and may other reports on this topic. So thank you. I still hold that the report presents fundamental misunderstandings of the energy industry.

        This approach to divestment is, in itself, an inequitable form of punishment across the industry. There is no real answer to it being a last resort. I read, “If they don’t shape up in 2 years and completely change the way they do business, we divest… ha-ha!!” that hardly constitutes an all options taken approach.

        I’m all for making statements about our energy usage, but I’m not for irrationally lashing out against small portions of a complex industry.

        • minhalexnguyen

          Going to give you the benefit of the doubt and say you must have skimmed over the relevant sections (it is super long):

          Ethical Investor, Rick Levin last year, and general Yale Policy says that when confronted with a “grave social injury”, Yale’s Investments Office only has two options: voice and exit.

          The Ethical Investor itself shows the futility of voice, as these companies have means of frustrating shareholder advocacy. There are numerous case studies (Rockefeller, CalPERS) supporting this claim.

          We first want to correct this futility of voice by engaging with the companies (it’s all in the proposal–TO BE CLEAR, we’re not just gonna divest straight away; we are going to contact these companies first!).

          Only if they fail will we Divest (exit). I’m 100% these options are collectively exhaustive, so yeah, divestment is a last resort when it comes to the IO.

          • Guest

            I’m aware of the protocol, the flowchart pretty much sums it up…. but you’re asking companies whose fundamental source of revenue is the sale of carbon intensive materials, like oils, natural gases, coals, etc… to divulge their carbon scores and then telling them they have 2 years to shape up or Yale pulls out. How in the world do you think a company like BP is going to decrease it’s NET carbon stock in any way other than drilling less. the response is obviously going to be “what the heck do you expect us to do? this is our fundamental source of revenue. We can’t develop, implement, and downstream renewables in 2 years to mitigate any significant part of our carbon profile.” The notion that you give them a chance with that timeframe is absurd.

            The contributor to the environmental problems are utilities and generation plants who burn the raw goods. these companies are the ones who are actually presented with the choice between renewable and non-renewable methods.. The kicker, they don’t appear on carbon tracker’s list because they don’t have a huge profile of carbon reserve assets. But honestly, wouldn’t a better tactic be to push for these utilities to switch to enlisting renewable resources, a energy stock where there are plenty companies already turning profit over. Maybe yale could invest in technologies that lower the shadow price of renewables to get grid parity going? Isn’t that a better investment strategy.. not just “put your hands behind your head BP, I’m pulling out!”

            I get the sense that data and reason is fitting the cause, not pushing for the cause given the data and reasoning.

            You know though, clearly minds are made up. In my opinion, the cause is worthy, the tactics are shortsighted.. Oh well though.

        • ilovelovedontyou

          Edit: My bad, I had copied the link to just the proposal above, not the full report (also on http://www.fossilfreeyale.org). Here is the full report. http://fossilfreeyale.files.wordpress.com/2013/02/areportonresponsibleenergyinvestingtotheyaleuniversityadvisorycommitteeoninvestorresponsibility-6.pdf

          The sections you’re looking for are under “Kew Gardens Principle.” The intention is not to dismiss you by appending the link; it’s just pretty well laid out in the report and impractical to copy in full here. I understand your concerns because we had the same ones when we thought through it, and this is what we came up with. It has some more depth (and length) than Alex Nguyen’s (good) summary below. Please check it out, that’s what it’s for!

  • MRB

    Effects of man-made climate change: drought, mass migration and mortality, coastlines disappear from melting ice, dissolving corals from acidic oceans that increase intensity of storm surges, tropical diseases move poleward. Let’s not forget positive feedback and run-away greenhouse outcome that led to Venus’ surface temperature of 860 degrees Fahrenheit.

    Effects of alleged endowment return decrease: I have to turn down the heater.

    I’ll put on an extra sweater, thanks.

    Fact: The FYY plan can’t hurt the endowment because the investments office is in charge of the magnitude of divestment.

    A world in which the effects mentioned are real and tangible makes any investments risky. Yale is merely investing in it’s future survival and future endowment returns by refusing to support the very thing threatening them.

    • HarborBeach

      Incredibly ill informed and sensationalistic

  • Nick Geiser

    “Neither will divestment politicize our endowment…. There is a difference between a negative injunction and a positive duty; we are not promoting sponsorship of green companies.”

    Right, because hitching Yale’s endowment to a deliberate and concerted campaign to shame the “fossil fuel industry” isn’t a political action at all.

    “Divestment is an acknowledgement of the scientifically proven link between carbon emissions and climate change, not an endorsement of policy.”

    No. It may boggle the mind, but you can consistently think that climate change is happening, the result of human activity, and /not/ an apocalyptic threat to the human race. Divestment is a strategy to shut down intelligent and civil debate in higher education about how we should respond to climate change. Divestment commits Yale as a matter of official policy to a particular view about the proper political response to climate change, which will shut out dissenting voices on campus.

    • Guest

      Divestment does not commit Yale to anything except acting against what we see as “grave social harms”, as we always have. The Ethical Investor trumps politics. If you disagree, you could also look at it as such: our endowment is political as it stands; by investing its money in fossil fuels, Yale is saying that we support this industry and the destruction it is doing to the planet and human existence. While humans are able to adapt, we should not have to adapt simply because of insatiable greed. Currently, we are making the political statement that we agree with that model.

      • phantomllama

        “uniteyale” I’m guessing is a reference to Unite Here. (But even if it isn’t, my point below stands in general terms.)

        Unite Here believe companies should enforce a $15/hr minimum wage. No doubt they think that the fact many do not is a “grave social harm.” They will soon be calling for divestment from such companies.

        The current situation minimises politicisation of the endowment. The alternative maximises it and requires us to consider investments on a case-by-case basis, thus rendering the endowment impotent.

        • Guest

          I doubt Unite Here will call for divestment. They’ve got too much riding on Yale’s financial situation in terms of retaining their jobs and retaining contract hikes.

    • guest1420

      Given that Yale states it doesn’t invest in what it sees as “grave social harms,” investing in fossil fuels is just as much a political statement as divesting: if we invest, it means Yale does not (as a matter of official policy) see global warming as having grave social harms; if we divest, it means it does. Give up the myth of the “apolitical” — everything is political.

  • Yonatan Yoni Landau

    Strong endorsement! Can someone post the link to vote though?

  • Phormio

    Yale has an endowment that surpasses the GDP of ~95 countries in the world. It posted a 12.5% return in 2012. We’ll be fine if we divest. And it’s the right thing to do.

    • yalie

      Those countries earn their GDP every year, though.

      • Phormio

        fair point. based on last year’s return though, it still surpassed the gains that year by 24 countries.

  • theantiyale

    People follow visuals; Blue and green can be a stunning combination.

  • hnesser

    I think it’s interesting that people are concerned about the politicization of the endowment. Money is political. Large amounts of money are largely political. The endowment has been and will be politicized, even in the absence of divestment. Our investment decisions reflect both a political reality and an institutional ideology which effects politics. Continuing to invest in fossil fuels (especially after this divestment campaign) would be an equally political statement… And one which I believe is dangerous to make.

  • Guest

    lets say the invested portion of the endowment is 20 billion dollars (actually 20.8), and that we return ~10% on investment (in an low-average year). That a 2 billion dollar return on investment every year. lets say that Swenson pulls off a g-d like ability to find returns in other investment vehicles that actualize nearly the same returns as the carbon intensive investments and the endowment now returns 9.9% a year as the result of excluding carbon companies (~1% drop in total returns). Thats a 20 million dollar loss every year, equivalent to the full paid tuition of 400 students. Given that 8.3% (1.66Bn) of our endowment is directly tied up in natural resources, I’d say these are generous statistics. Given the operating budget is 3 billion, that means that just under ~1% of operating revenue will be cut.

    So what difference will a 20 million dollar per year gap in the yearly operating revenue make at the University?

    Permenent Administrative cuts, graduate student cuts, resource cuts, salary freezes, etc. All of these have been felt before and are incredibly contentious issues themselves.

    I just believe there are much, much better methods out there to deal with this particular cause. I believe we can be productive on this front. If we’re doomed to lose 20 million, I’d rather retain our carbon intensive investment strategies and just cough up 20 million dollars a year in research devoted to renewable advancement. or give that 20 million to renewable programs. or literally anything productive in the renewable sector. can you imagine that? we’d have 20 million a year to spend on making the world a better place, rather than just 20 million thats no longer there that we make budget cuts to survive out. It’s strictly better to have 20 million than to not, regardless of how severe the message. and get this…! We WOULDN’T alienate millions from our wealthy donors who work in the energy sector. I am confident we will find a viable energy alternative. It just takes time, and it won’t be achieved through divestment.

    The endowment is real money and the livelihood of professors, employees of yale (locals 34 & 35), and all of us students. It’s not a fund for undergraduates to play activist with. Yes, we divested in the past.. I just don’t see this qualifying for those same standards.

    If we chose to divest, I hope we can come up with better divestment criteria.

    Want to make statements? make them through productive means, not grand and punishing gestures.

    • ilovelovedontyou

      Whew, this comment seems like quite the straw man.

      I think this is where Fossil Free Yale has actually done well: if you check out their actual proposal, they are not recommending Yale divest from the entire industry, or even the biggest companies: they first ask Yale to engage constructively with the top companies, and then only divest from a small portion of the worst companies that do not cooperate. Additionally, and this is very important, in their proposal they suggest that Yale’s Investment Office weigh in on the scope of divestment (as to avoid harm to the university’s endowment) and on when to sell the worst companies (so as to optimize the transition). It is far from ” a grand and punishing gesture” as you suggest. Please don’t misinform, and please don’t use numbers from the top of your head that don’t relate to the actual proposal. Your hypothetical catastrophe is far-fetched given the case at hand.

      Here is a link to a decently Indesigned version of the Fossil Free Yale Proposal http://fossilfreeyale.files.wordpress.com/2013/02/ffy-proposal3.pdf

      • Yonatan Yoni Landau

        your math is off – i posted above.

      • Guest

        I don’t think that divestment decreasing the year ahead endowment volume by 00.10% percent is that far fetched (one tenth of a percent is an incredibly small amount). 20,000,000/20,000,000,000 = 0.10%. Certainly within the bounds of divestment’s purposed return profile. Given the news that we rand a 39mill deficit and are already planning to layoff faculty, I’m not sold. Call it misinformation if you want, it certainly puts into perspective the scale of the risk. We’re not talking financial aid meltdown, but we are talking fairly sizable impacts at the university

        The reality, I believe, is that divestment would probably take a much bigger toll than that.

        The standards for divestment pretty much guarantee we never actually pull out of a single carbon company.

        Q: Is their carbon profile big?
        A: Yes
        Q: have they shaped up?
        A: No
        Q: does this meet the standards of the Ethical Investor for us to divest?
        A: Yes
        Q: But wait!…will we lose any money by divesting?
        A: Yes
        Conclusion: okay nevermind, we can’t divest, it will hurt the endowment.

        By those standards you can’t actually call it divestment. That’s just how every investment decision is made.

    • guest

      I’m not sure why this argument is still being made. Yale’s Investment’s Office will scale divestment appropriately so that it won’t hurt the operations budget.
      The truth is, your back of the envelope math assumes a lot of arbitrary percentages (and then you just run impacts on a 20 million dollar loss like its a given fact). Only Swenson and his team know the degree of loss if there is even one. There is no way, because of our opaque portfolio, and the fact that we are not Swenson that either you or I can know. Especially because we will never know the replacement public equities he and his team will pick to replace the FF stocks. We can’t possibly know. That’s just irrefutable.

      But the most important thing is:
      Per FFY’s proposal, if it hurts us, we won’t do it.
      It’s a simple as that.

      If we don’t have the capability, we won’t do it.
      That means if there are “permanent Administrative cuts” that are so incredibly deep and sundering, we won’t do it.

      I’ll say this again if it isn’t clear enough:

      If divestment hurts us–as evaluated by the Investments Office–we won’t divest, or will scale back appropriately via the Investments Office.

  • Yonatan Yoni Landau

    Yale has very clear ethical investing policies and a yes to divestment simply encourages the trustees to follow those policies. In doing so, they give the world hope that we might avert the worst of climate change.

    To clear up some confusion, though, there is no reasonable way to predict a drop in returns based on the trustee passing a policy that has been recommended.

    1. Most of the stock market is highly correlated and energy companies are no different. There are myriad ways to invest and get the same risk and return profile.

    2. The policy recommends that Yale, after asking for disclosure of carbon emissions, divests from just the dirtiest (the bottom quartile) of the top 200 publicly traded companies. That means that it would be extremely easy to purchase companies that have a cleaner emissions/energy produced ratio and get highly correlated returns.

    3. The policy says nothing about most of Yale’s portfolio, only targeting the largest publicly traded companies. 86.6% of Yale’s assets aren’t even publicly traded stocks. 90% of those that are, are not energy companies. Of those energy company stocks, a fraction (perhaps 1/5) are being targeted.

    If, by some stretch of the imagination, you can argue that somehow there are no comparable investments with a similar risk, return and covariance with the rest of the portfolio you still couldn’t possibly lose more than perhaps a few hundredths of a percentage point. This amount is so small that it is swallowed by the standard deviation in the portfolio – it is not statistically significant.

    4. None of this is really the point – Yale has ethical investing policies that are clearly laid out and should follow it’s policies. The investment office will decide exactly how to do that, in conjunction with the trustees. Yale students simply need to make them do that.

    • Guest

      Highly correlated is a far stretch of the imagination. If it was that easy to pick correlated stocks we’d all be earning +12% on investment, but the average, in reality, is like 4-5%.

      You cannot deny that losses would exist and be in the range of the millions and that loss would have an impact on the endowment. We’re not talking hundreds of millions, but we are talking 7-8 figures. Enough to hurt our services if any significant portion of the endowment is divested.

      The premise that Yale should follow it’s policies is true. FFY just paints the energy supply industry as only bad. Their only function is carbon pollution, lets forget that they supply energy to every single human and improve our lives dramatically. The amount of lives upheld by carbon based industrialization through heat, electricity, etc is a number exponentially greater than those lost by carbon pollution or a 2 C increase in global temperature over 100 years. Thats just a fact. It’s unfortunate that the technology doesn’t exist yet to make an equitable renewable transition and still supply our full energy demand while also keeping prices reasonable for working class families, including you all when you get your first jobs. Give the private market 10 more years though… it will happen because renewables are cheaper in the long run and because federal legislation to deregulate these firms capital strategies is leveling the playing field for that type of innovation to catch on. Don’t fault the BP’s for not taking on that task. Instead support those who are (they’re gonna make billions one day, good friends to have). FFY goes on to compare lousy carbon practices with the moral imperative of apartheid, which was entrenched political racism with no upshot. There were NO redeeming factors to apartheid but there are SO MANY redeeming qualities to big oil, including energy supply, national security, research, innovation, jobs, commerce, globalization, many others. The scope of FFY ethics is so narrow and skewed. I just don’t see these companies as equivalent to the villains of south african racial segregation. The portraits being painted here are Picassos, you recognize what the images are, but the perspectives are purposefully skewed.

      I’m just tired of this crap. Forcing the FFY perspective on the Yale Endowment forces that perspective on all of us here at the University. We all wonder what Ivory Tower is… FFY is the prime example of Ivory Tower, descending from the bastions of liberal ideology to impose carbon industrialization ethics on the everyman.

  • lemonchip

    divest. gud, but endwmnit down.
    build McD’s on Old Campus. endowup

  • terryhughes

    Yale ran a $39 million deficit last year, but the YDN wants to fence off a whole quarter of the market to the endowment.

    Energy companies like Exxon/Mobil would be out, but investments not in energy companies but that totally DEPEND on energy companies would be fine, and broad investment in countries that largely bottom their national “growth” strategies on massive pollution (China, India, others) pass muster. Fine. As long as one is chucking out economic need and rationality, why not go the whole way.

    And then we have the loons who think Swensen can somehow glide around such proposed restrictions and bring in those desperately needed investment returns anyway, confusing him with Harry Potter. Perhaps these articles will concentrate such minds a bit, although I’m not holding my breath:

    Why is Buffett Buying Exxon? The 1 Chart You Have to See http://www.fool.com/investing/general/2013/11/19/why-is-warren-buffett-buying-exxon-mobil-the-1-cha.aspx

    3 reasons Warren Buffett bought ExxonMobil

    Warren Buffett Makes Major Moves Involving Exxon Mobil Corporation

  • Nomadic100

    I never thought I would write such an opinion, but now I am old. It seems to be the folly of the young to assume that their actions carry far more weight than they do. This issue seems to exemplify that notion. We old people have other follies. Moreover, is it really so beyond the pale to inquire as to whether “AGW” really exists? I think not.

  • Iliana

    I’m pretty sure Yale did not divest, and if it did, it was definitely not in the 70’s. Although this was a well-written argument, and I agree with what you’re saying (I’m also a divestment organizer), please do some more research on Yale’s history. Good luck on the vote.

  • lucydaisy

    Given that there is ample evidence that there has been absolutely no “global warming” since 1998, and that it is becoming increasingly clear that adherence to AGW is essentially religious in nature, this recommendation from the YDN flies in the face of reality.

  • baruchatta

    “Fossil Free Yale” – have you been to the Peabody? Lots of fossils there. (humor)