Yale’s announcement last week that it divested $10 million from fossil fuels has prompted debate in the investment community over the ethics, legality and practicality of fossil fuel divestment.

Following Chief Investment Officer David Swensen’s April 12 email to Yale’s Advisory Committee on Investor Responsibility announcing the move, climate change activist group Fossil Free Yale praised the partial divestment but called on the University to take steps toward complete divestment. Furthermore, FFY members said Yale should be more conscious of the ethical implications of its investments, although financial experts said universities often prioritize the will of donors over moral quandaries when investing.

“For me, Swensen’s letter had no ethical grounding,” said FFY organizer Elias Estabrook ’16. “There was a lot missing.”

Estabrook said FFY will continue to push for a divestment decision that is an ethical commitment rather than the kind of request to external managers that Swensen wrote in August 2014, which asked managers to consider the financial risks associated with climate change when making investment choices.

The argument for divestment has gained momentum recently, spurred on by Yale’s participation in the 2015 Climate Change Conference in Paris. But while last week’s announcement may indicate that Swensen is approaching Yale’s assets with climate change in mind, complete divestment is a long way off, endowment experts interviewed said.

“Yale’s values are broadly humanistic, but they are not the values that would lead to the consistent application of socially responsible investment,” said William Jarvis ’77, managing director of the Commonfund Institute, an institutional investment firm. “Climate change arguments don’t change the way investment law is set up.”

Many of the over 500 institutional endowments that have divested from fossil fuels are faith-based institutions. Jarvis said these schools often rely on moral or religious reasons, rather than economic ones, to rationalize divestment. Because 75 percent of Yale’s endowment is restricted, the Investments Office must navigate a complex network of legal agreements with donors before making a decision to divest and that universities often seek legal counsel before deciding to do so.

Although the Investments Office did not specify whether the $10 million portion of the endowment that was divested came from restricted or unrestricted funds, Jarvis said he suspected the money was unrestricted and thus easier to move around without legal implications. According to the 2015 Endowment Report, around 6.8 percent of the endowment was invested in natural resources in fiscal year 2015, a decease from the 8.3 percent average of the previous four years.

“The Yale stakeholder community has many different perspectives,” said Andrew Lo ’80, a professor of finance at the Massachusetts Institute of Technology.

With his August 2014 letter, Swensen was building on a theory of “stranded assets,” Jarvis said. A stranded asset is an investment expected to have value, but which underperforms prematurely. Industries like tar sands and thermal coal — industries Yale divested from last year — could be devalued by international climate regulations.

Jarvis cited the demise of Peabody Energy, a coal company which declared bankruptcy last week, as an example of the increasing instability of the fossil fuel industry. But fossil fuel companies are not the only market at risk from regulation, Lo said. Pharmaceutical companies have also been subject to restrictive pricing regulation from the federal government, he said

“There’s a complicated landscape between the government and the private sector,” Lo said.

But while Lo and Jarvis said universities should be cautious before making sweeping divestment decisions, other financial experts interviewed said Yale should be more focused on comprehensive divestment from greenhouse gas producing industries. Jess Gaspar, who oversees low-carbon initiatives at the Commonfund Institute, told the New Haven Register last week that Yale could significantly reduce its dependence on investments that most threaten the environment without damaging the endowment.

FFY views itself as playing a central role in helping Yale traverse these complex financial, ethical and legal questions surrounding divestment. As Yale enters uncharted territory with a $10 million fossil fuel divestment, FFY members said they believe student activism has been a key player in the debate.

“Students have been critical in making not only the [Advisory Committee on Investor Responsibility], but also Yale administrators more broadly, think about what an investment in fossil fuel means and the full range of ethical questions related to that investment,” Estabrook said. “We see David Swensen’s 2014 commitment as inspired in part by the work of Fossil Free Yale with the ACIR.”

Estabrook added that last week’s announcement not only sent a message to other U.S. colleges and universities to consider divestment, but that it was also an encouraging signal to climate change activists on college campuses nationwide.

“We recognize that even this slight shift of money is sending a political signal,” Estabrook said. “It said to the rest of the divestment movement, ‘Hey, things are moving.’”