For Yale students, no choice but to divest
NEW HAVEN — The Yale and Harvard students who disrupted the annual football game Nov. 23 see climate change posing a threat to the quality of their adult life.
For them, profiting from companies that contribute to rising global temperatures is simply unconscionable.
But it’s uncertain whether students’ demands that their schools divest from fossil fuel companies, and that their investment managers divest themselves of the Puerto Rican debt they own, will succeed in cleansing Harvard’s $40.9 billion endowment, or Yale’s $30.3 billion investments, of companies such as ExxonMobil.
But Yale’s policy of engagement, seeking to persuade fossil fuel companies to shift to renewable energy by proposing shareholder resolutions, has not shown itself to be successful either, say the students.
Nora Heaphy, a junior from New Haven who is a leader of the Yale Endowment Justice Coalition and who on Friday was ordered to do five hours of community service for disrupting the YaleHarvard game, said a 2017 resolution presented by the Dwight Hall Socially Responsible Investment Fund, which called for Exxon to disclose its lobbying practices, failed, though Yale’s Advisory Committee on Investor Responsibility had recommended the university vote in favor of it.
“Even with a vastly insufficient resolution, a very small thing, Yale couldn’t prove they could make the shareholder resolution process work,” Heaphy said.
The Yale endowment activists are seeking much more than disclosure about Exxon’s lobbying, however. “We believe that in order for our generation to have a safe and livable future, these fossil fuel companies that corrupt our politics to prevent climate action … have to go out of business,” Heaphy said.
While it’s true that “Yale divesting from the fossil fuel industry is not going to put Exxon out of business tomorrow … the goal of Yale divesting would be making a really strong statement … that we need to move away from the fossil fuel industry as quickly as possible,” she said.
When asked for examples of successful Yale shareholder resolutions dealing with climate change or Puerto Rican debt, university spokeswoman Karen Peart did not offer any, but referred to Yale President Peter Salovey’s Dec. 1 statement about the YaleHarvard protest.
“While Yale does not favor divestment, our Investments Office engages constructively with investment managers on the climate impacts of their portfolio companies,” Salovey wrote. “Yale asks its outside endowment managers not to hold companies that disregard the social and financial costs of climate change and that fail to take economically sensible steps to reduce greenhouse gas emissions.”
That 2014 policy was outlined in a letter to Yale’s investment managers from Chief Investment Officer David Swensen, who wrote, “as you consider the implications of climate change, Yale expects you to discuss with company managements the financial risks of climate change and the financial implications of current and prospective government policies to reduce greenhouse gas emissions. You should encourage managements to mitigate financial risks and to increase financial returns by reducing greenhouse gas emissions.”
Supporters of divestment have grown more successful as the climate crisis grows more dire. Since Hampshire College in Amherst, Mass., became the first institution to divest from fossil fuels in 2011, more than 1,110 institutions have divested, with assets totaling $11 trillion, according to the climate advocacy group 350.org. More than 40 colleges and universities have divested, according to Nonprofit Quarterly.
Charles Skorina heads a San Franciscobased executive search firm and recruits chief investment officers and senior asset managers for endowments, foundations and Wall Street firms. He said divesting from an endowment isn’t a simple task.
“People think there’s this thing called an endowment, it’s this one big glob of money, you wave your hand and it changes,” Skorina said. In fact, an endowment is composed of thousands of funds and contractual arrangements. Yale’s endowment, in particular, is heavily invested in what’s known as private equity.
“I applaud the kids … but they haven’t researched it and they don’t really want to, because if you did you’d realize what a big ball of string this whole divestment thing is, and when you try to unravel it, it gets really complicated,” Skorina said.