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The committee responsible for ensuring that Yale allocates its investments in accordance with social and political standards has deemed energy companies ExxonMobil and Chevron not eligible for Yale investment.

The Corporation Committee on Investor Responsibility has added energy companies ExxonMobil and Chevron to a list of companies ineligible for Yale investment based on the recommendation of the University’s Advisory Committee on Investor Responsibility.

The committee cited Principle No. 3 on the Fossil Fuel Investment Principles, which was adopted by the Yale Board of Trustees in April 2021, as the reasoning behind the decision. As of Dec. 20, 2021, the list of companies ineligible for Yale investment did not include either company, but as of Monday, they have been added to the list without comment from the University. 

“The divestment movement is incredibly powerful right now,” said Moses Goren ‘23, a member of the student-led Endowment Justice Coalition. “Harvard has divested, most of the Ivy League has divested…and the Yale administration knows that we are going to continue putting pressure until they have completely divested.”

The ACIR does not have access to what securities are in the Yale endowment, nor whether Yale currently has capital invested in ExxonMobil or Chevron. Instead, the ACIR determines grounds for divestment based on the principles outlined in the 1972 book “The Ethical Investor” to determine whether a company’s actions cause “grave social injury.” Once the ACIR recommends a company as ineligible for Yale’s investment, the Corporation Committee on Investor Responsibility can accept the recommendation, which the Investments Office must then comply with.

In April 2021, the Yale Board of Trustees adopted the Fossil Fuel Investment Principles, which help to apply lessons from The Ethical Investor to investments in the fossil fuel industry. The ACIR cited Principle No. 3 on the Fossil Fuel Investment Principles as the rationale behind divestment from ExxonMobil and Chevron, flagging the two companies as “undermin[ing] sensible government regulation and industry self-regulation addressing climate change.” 

The news comes after years of student pressure to divest from the fossil fuel industry as a whole. Since as early as 2016, student activists from Fossil Free Yale and the Endowment Justice Coalition have pressured the University to divest from ExxonMobil in particular, arguing that the company has a history of climate change denial. In 2020, the State of Connecticut sued Exxon and accused the company of facilitating “deceptive acts” in order to “create uncertainty about climate science.” 

“The evidence strongly suggests that Exxon and Chevron have violated principles 3 and 4 [of the Fossil Fuel Investment Principles] on many occasions and are almost certainly still violating them today,” Kenneth Gillingham, a professor at the Yale School of the Environment and a member of the committee that developed Yale’s new fossil fuel investment principles, wrote in an email. “This is a great first step in applying the principles to remove unethical parties from eligibility for investment by the Yale endowment.”

The ACIR did not respond to requests for comment at the time of publication. However, the Committee had previously maintained that ExxonMobil had not engaged in any activity that would qualify it for divestment.

“Exxon does not appear to be engaging in any conduct or activity that would warrant divestment,” ACIR head Jonathan Macey LAW ’82 told the News in 2017. “[Exxon] seems to be certainly no worse than any other fossil fuel company, with respect to their position on climate change. There doesn’t seem to be any basis for singling them out for divestment.”

However, under the new, more stringent principles for fossil fuel divestment — which were unveiled last April — both ExxonMobil and Chevron are found to be in violation of Principle No. 3, which makes them ineligible for University investment. 

The decision to prohibit investment into ExxonMobil and Chevron comes at a time when the two oil giants have been placed in the national spotlight for their role in lobbying against government climate policy. According to research done by the thinktank InfluenceMap, the two companies top the list of lobby offenders due to their “prolific and highly sophisticated” lobbying tactics. The research concluded that the companies are influencing the government to take “incredibly dangerous paths” with regards to climate change.

“We are pleased, as always, to ensure that Yale’s investment portfolio complies with the [Corporate Committee on Investor Responsibility]’s independent decisions as to the permissibility of investments on ethical grounds,” a representative from the Yale Investments Office wrote to the News.

Goren, a member of the Endowment Justice Coalition, a student organization that calls for Yale to divest fully from the fossil fuel industry, expressed concerns about the Investment Office’s lack of transparency. Recently, he noticed that Yale’s investment portfolio included unconventional assets, such as stakes in poker sites, which he felt raised questions about the ethical standards guiding investment choices. Goren said that he would “love to hear” why ExxonMobil and Chevron were added to the list as of January 2022 and “what kind of conversations [the ACIR] had that led up to this.”

Josie Steuer-Ingall ’24, another member of the EJC, thought that the lack of an “enforcement mechanism” for ensuring that the Yale endowment does not invest in ExxonMobil or Chevron was “also really troubling.”

In response, a spokesperson from the Investments Office said that “the notion of a ‘lack of an enforcement mechanism’ is quite misleading. The Investments Office, as an arm of the University, is compelled to follow the CCIR’s decisions and is pleased to do so.”

It is unclear how much of Yale’s endowment is invested directly into fossil fuels. According to the 2020 endowment report, 3.9 percent of the $31.2 billion endowment at the time was invested into natural resources — which includes oil and gas, timberland and agriculture.

The EJC analyzes Yale’s tax forms, including the SEC 13F and IRS 990 forms, to determine some of the companies that Yale invests in. The group maintains that Yale had holdings invested in the fracking company EQT, effective as of Nov. 22, 2021, though the SEC has not reviewed and verified Yale’s filing. 

However, Goren is hopeful about the future of Yale’s endowment. Despite the concerns raised, Goren acknowledged that prohibiting investment into Exxon and Chevron was a “big and exciting step.”

According to October 2021 data from Statista, ExxonMobil and Chevron were ranked as the number one and number two largest oil companies by market capitalization in the United States, respectively.

Update, Feb. 3: After publication, a spokesperson for the Yale Investments Office reached out to comment on the student quote on enforcement mechanisms. This story has been updated with their comments.