A referendum was held from November 17 to November 20, 2013, on whether Yale’s investment office should divest from companies that have operations in the field of fossil fuels.

In the days leading to the vote, YCC  provided opportunities for all sides to be heard and present their case.

Pro statement

(Submitted by Fossil Free Yale on November 3, 2013)

The investment of Yale’s endowment is subject to guidelines, formally adopted in 1972, set forth in The Ethical Investor (a book authored by members of the Yale community). These criteria are commonly referred to as need, proximity, capability, and last resort. According to these guidelines divestment from a company’s stock is appropriate if: 1) that company’s activities are causing “grave social harms,” 2) Yale understands these harms and their sources well, 3) Yale is able to divest (without unduly harming its financial standing), and 4) other means of ameliorating the harm are insufficient and divestment would help address that harm.

1.     Extraction and combustion of fossil fuels cause climate change. According to the Intergovernmental Panel on Climate Change, unless significant efforts are undertaken this decade, the stabilization of global temperatures will be nearly impossible. The World Bank warns that 2°C of global warming will result in increased incidence of floods, more intense storms, and widespread food and water shortages. However, if present rates continue, earth is set to exceed even this target of 2°C—to around 4°C.

2.     Yale’s accomplishments as a leader in research are a given. In the words of former President Levin, “[i]t is, after all, our scientists who have identified the causes and effects of climate change and who are researching ways to address it.”

3.   Divestment must not unduly harm the financial strength of the Yale endowment. According to the research (done by firms including Aperio Group, LLC), fossil fuel divestment is unlikely to significantly impact the financial strength of an endowment. Portfolios without fossil fuel stocks demonstrate risk and return comparable to standard portfolios.

For example, computing the returns of indices (like the S&P 500 and Russell 3000), with and without fossil fuel investments has not yielded evidence of any significant impact on returns.

4.  The combustion and extraction of fossil fuels cause climate change and other social harms which have not been adequately addressed despite their longstanding nature. Divestment outside of Yale has already had significant impact, according to a recent Oxford University report. There has been documented positive influence on investor and policymaker opinion. Divestment at Yale would lead to more widespread consequences—Yale has historically been a pioneer in ethical investment policy, but is also a leader in portfolio management.

Any divestment proposal would be subject to approval by both Yale’s Advisory Committee on Investor Responsibility, and the Corporation Committee on Investor Responsibility. Fossil fuel divestment would very likely be approached by screening companies dealing in coal, oil & gas to determine a list for those which fail to meet certain data-based cutoffs. Yale would divest from those companies that failed to meet its standards.

For FAQs, visit this webpage. In working with the Yale Advisory Committee on Investor Responsibility, students authored a comprehensive report outlining the case for fossil fuel divestment, available on request.

NO rebuttal to pro statement

rebuttal to the con statement

Con statement

(Submitted by Students for a Strong Endowment on November 8, 2013)

Under the stewardship of David Swensen, the university’s endowment has enjoyed truly remarkable growth. This is not a lucky accident. It is a product of the flexible mandate granted to the Investments Office, which allows finance professionals to react to market conditions at any given time.

In order for this success to be sustained, enabling future generations to enjoy the same resources that we have benefited from, we must put the university’s financial stability ahead of the desire to use Yale’s investments to make a political statement.

We do not seek to in any way belittle the efforts of those who rightly draw our attention to their profoundly held environmental concerns. They pose sensible and valid questions. But we strongly believe, for a number of reasons, that the university’s endowment is an entirely inappropriate location to air those questions.

Most troubling is the notion of precedent. We worry that the example set by divestment would encourage anyone with a cause to use the endowment as a means of political expression – once Yale accepts this notion, it would inevitably come under pressure to divest its investments in numerous other sectors. Some would call for divestment from companies involved in particular countries. This approach is unsustainable and economically unsound.

Moreover, it is a simple fact that we use the electricity and gas that fossil fuels produce in every aspect of our daily lives. We consider it unproductive to engage in wholesale condemnation of the means of their production when we depend on its results.

We profoundly respect those around the world who work within the fossil fuel industry – sometimes exposing themselves to significant personal risk – and do not wish to align ourselves with a movement which seeks to destabilize the companies that employ them. It is also evident that withdrawing investments from businesses within this sector will make it more difficult for such firms to research and implement sustainable projects of their own.

Similarly, we believe that a policy of divestment from fossil fuels would restrict the endowment’s capacity to invest in renewable energy, since such investments could no longer be hedged by maintaining a presence in more conventional companies within the sector.

If we are to sacrifice our endowment’s flexibility in pursuit of political goals, it is crucial that we remember what the consequences of our actions might be. We do not want to see financial aid cut. We do not want the university to be unable to attract globally renowned faculty. We do not want Yale to lack the funding that it needs to maintain its support of world-leading research. Supporting divestment would be a signal that these crucial institutional goals are no longer our first priority.

As students who care deeply about the future of our university, we hope that you will join us in voting ‘no’ to divestment. In doing so, you will play your part in helping Yale thrive for many years to come.