David Swensen on Divestment at Yale

The Chief Investment Officer wrote a letter to the Yale community last week.

In 2014, the Yale Investments Office developed a plan to address climate change risks in the Endowment portfolio. The plan has been implemented through Yale’s external managers, who collectively are responsible for managing nearly all of the University’s Endowment assets. Engagement with Yale’s managers is a powerful tool through which the University influences the character of the Endowment. Yale’s managers make critical decisions about what investments are selected for Yale’s portfolio and what issues are raised with company management teams. Given the nature of Yale’s investment strategy, direct dialogue with its managers is the most effective means of addressing climate change risks in the portfolio.

Yale’s investment policy regarding climate change asks that external managers:

Assess:

      • the greenhouse gas (GHG) footprint of prospective investments
      • the direct costs of the consequences of climate change on expected returns
      • the financial costs of policies (such as a carbon tax) aimed at reducing GHG emissions on expected returns

Discuss with company managements:

      • the financial risks of climate change
      • the financial implications of prospective, well-crafted government policies to reduce GHG emissions

Encourage company managements:

      • to mitigate financial risks and increase financial returns by reducing GHG emissions

Avoid:

      • companies that refuse to acknowledge the social and financial costs of climate change and that fail to take economically sensible steps to reduce GHG emissions

2020 Update on Climate Change, Yale Investments Office

Money talks, fund managers listen.

The composition of Yale’s Endowment stems from many individual investment decisions made by a host of world-class external investment managers. As these managers incorporate the full costs of climate change into investment choices and, in the cases of corporate investments, engage the managements of portfolio companies in discussions about addressing climate change, the risks associated with climate change are reduced. The risk reduction may come from sales of offending investments, from avoiding offending investments or from influencing company managements to adopt climate-friendly policies. The accumulation of investment decisions that incorporate the full costs of climate change leads to a shift in flows of capital towards less carbon-intensive investments and away from more carbon-intensive investments.

Read more about the school’s policy on climate change here.

Swensen reaffirms climate change as a guiding factor in Yale’s investment policy

Swensen breaks silence on divestment, Yale Daily News

DUBROW: A statement on divestment, Yale Daily News

Yale Activists Want Divestment. David Swensen Isn’t Budging., Institutional Investor

Snowfall outside of Ezra Stiles College at Yale.
Twitter @yalealumnimag

Post by Marcelino Pantoja