Amay Tewari, Senior Photographer

The committee that recommends areas for divestment to Yale’s board of trustees will begin investigating companies in China to determine whether some may be deemed ineligible for Yale investment in light of the Chinese government’s widespread human rights violations.

Both Matthew Mendelsohn ’07, Yale’s chief investment officer, and University President Peter Salovey declined to reveal how much of Yale’s endowment is invested in Chinese companies. However, according to the Investment Office’s 2020 report, it allocates 6.5 percent of the portfolio, or just over $2 billion, to emerging markets, which includes China. The New York Times further revealed that, as of 2015, part of the endowment’s emerging markets portfolio had gone toward two major Chinese companies, Tencent and JD.com. Both Mendelsohn and Salovey did not respond to a request to guarantee that the companies receiving investments from the University were entirely uninvolved with human rights violations in China. Since 2017, the Chinese government has been engaged in a process of systemic oppression of the Uyghur Muslim population in western China, drawing widespread condemnation.

“We’re in the process of [probing possible Chinese investments],” law professor Jonathan Macey LAW ’82 said. “We’re going to be starting to do that early in the semester.”

The University’s Advisory Committee on Investor Responsibility, or ACIR, is responsible for ensuring that Yale allocates its investments in accordance with social and political standards, and works in tandem with the Yale Corporation Committee on Investor Responsibility, or CCIR, which makes final decisions on investment practices. Both committees were heavily involved in implementing the University’s new fossil fuel investment principles in April.

Macey, who chairs the ACIR, explained that the committee had not undertaken this investigation until recently because it had been predominantly focused on the question of divestment from fossil fuels. Though the committee has not yet started its review, Macey said he suspects that some companies will not meet Yale’s principles for investment.

“My intuition is that there’ll be a range of activities among companies and that some might be eligible for divestment,” Macey said.

When asked in an interview, Salovey would not guarantee that any company that Yale is invested in is not involved in any of the ongoing human rights abuses in China. However, he said that when the University uses a hedge fund manager in China, the Investments Office “makes our principles clear to that fund manager” and requires transparency in the investments. 

He added that there is a mechanism by which students can raise concerns over Yale’s investment practices. 

“In any geography, we partner only with investment managers who meet our sterling ethical standards, and our relationships in China are no exception,” Mendelsohn wrote in an email to the News.

Some members of the Yale community have previously called for Yale to sever all of its financial ties with China, including with private businesses, due to ongoing human rights violations.

According to a report from the Center for Strategic and International Security, “the [Chinese Communist] Party’s overall aim appears to be to ensure that a wide range of businesses are under the influence of the CCP and willing to work with it to achieve national strategic objectives.”

Rayhan Asat, a human rights lawyer focused on the Uyghur crisis in China and former Yale World Fellow, wrote in an email to the News that while private companies have been instrumental in Chinese economic growth, the government has begun to crackdown on them, especially when they “get in the way of the Chinese government’s specific goal.” 

Macey, however, disagreed that Yale should divest from all Chinese companies.

“I don’t think that doing business in China or having a relationship with the Chinese government is something that is automatically grounds for divestment,” Macey said. “They have to be associated with a particular human rights abuse or some grave social harm.”

Salovey agreed with Macey’s view of the relationship between private and public investment, saying that there is a strong delineation between state-owned enterprises and private businesses. He further agreed that a company must be actively engaged in causing social injury to warrant divestment. 

Salovey also noted that Yale is not unique in investing in Chinese companies, pointing to both other university endowments and mutual funds that are invested in emerging markets. The investment, like any other foreign investment, comes with risk which the University is monitoring, he said. 

“We are watching social and political developments in China,” Salovey added. “We are certainly cognizant of relations between the U.S. and China. And particularly with any kind of foreign investment activity there’s geopolitical risk. And we have to assess that as part of whether it makes sense to be investing in other parts of the world.”

Still, Asat argued that Yale should hold itself to a higher standard. 

“Regardless of the financial imperative to invest in Chinese market funds, Yale should abide by a basic moral standard,” Asat told the News. “That moral standard demands that even, and especially, when circumstances encourage and reward harmful investments, we must seek other solutions. There is always a choice, and Yale must make the right one based on its principles, even if it is not easy.”

The University has grappled with similar issues in the past. In apartheid South Africa, the University divested from a company that was involved in producing identity cards that were used to segregate society, according to Salovey. The University also divested from an oil company operating in Sudan, where the government was determined to be comitting genocide in Darfur. 

In January 2021, the U.S. State Department labeled China’s repression of the Uyghur muslim population a ‘genocide.’

The worsening of relations between the U.S. and China have placed U.S. universities in a precarious position, as they aim to continue collaborative work with Chinese academics while remaining within the law. In December, nearly 100 Yale professors protested the U.S. government’s response to the worsening relations, denouncing the Department of Justice’s China Initiative as a threat to academic freedom and as discriminatory towards academics of Asian descent. 

In August 2020, the State Department urged university endowments to divest from Chinese holdings, pointing to the human rights abuses occurring in China and suggesting that certain firms may be delisted from stock exchanges. 

“The boards of your institution’s endowment funds have a moral obligation, and perhaps even a fiduciary duty, to ensure that your institution has clean investments and clean endowment funds,” Keith Krach, the former undersecretary of state for economic growth, energy and the environment, wrote in the August 2020 letter.

Krach continued, saying that “consequently, the boards of U.S. university endowments would be prudent to divest from PRC [People’s Republic of China] firms’ stocks in the likely outcome that enhanced listing standards lead to a wholesale delisting of PRC firms from U.S. exchanges by the end of next year.” 

While Yale did not follow the State Department’s recommendations, Mendelsohn made clear that the University is continuously watching this issue. 

“We are monitoring social and political developments in China, including and especially U.S.-China relations,” Mendelsohn wrote in an email to the News. “Geopolitical risk is necessarily a consideration in all foreign investment activity, and China is a top focus at the moment.” 

The ACIR determines grounds for divestment based on the principles outlined in the 1972 book “The Ethical Investor” written by Yale professor John Simon and former Yale professors Charles T. Powers and Jon P. Gunnemann.

Clarification, Jan. 26: This article has been updated to reflect that the ACIR does not investigate individual holdings by the Yale endowment, but rather the ACIR will use the principles of the Ethical Investor to determine whether a company’s actions are causing grave social injury. That company may or may not be a recipient of Yale investment.