Yale’s Chief Investment Officer David Swensen sent a letter this week updating the university community on the endowment’s approach to addressing and accounting for climate change, ultimately standing firm against divesting the endowment from fossil fuels. Instead, Yale will take a thoughtful approach to screening investments and will look for opportunities to engage in real sustainability efforts.
The letter came after a meeting between the Yale Faculty of Arts and Sciences Senate and the Endowment Justice Coalition, during which the groups pushed for a ceasing of fossil fuel investments.
As Swensen stated:
“I differ with divestment proponents about the means to transition to a greener economy, but I emphatically share their belief in the importance of that goal and its urgency. The Yale Endowment will continue to work with its external managers to incorporate the costs of carbon emissions into investment decisions, and my team and I will continue to seek the strong financial returns necessary to support Yale’s research and teaching — which together hold tremendous potential to make a critical difference in this fight.”
Yale has been a frequent target of divestment activists and students on campus over the years. Yale first rejected divestment back in 2014 when it’s Corporation Committee on Investor Responsibility (CCIR) considered a divestment proposal put forward by students and decided against it. In 2016, the university sold its position in three companies that engaged in oil sands and coal development, but did not divest, and in 2017, Yale rebuffed students’ demands to eliminate all investments in ExxonMobil.
In an interview with the Yale Daily News, Swensen outlined his reasoning for opposing divestment. He spoke to the nuances of the energy mix and how shutting down fossil fuel production and use could actually lead to increased emissions and exacerbate climate change:
“If you just produced from existing wells, and you didn’t explore … and you didn’t drill new wells to exploit what you’ve got, the production would go down by 25 to 30 percent for gas and for oil,” Swensen told the News. “And so that means that you’re going to end up favoring coal, relative to gas and oil. Why would you do that? That’s perverse. It actually makes things worse. It’s not a very thoughtful demand.”
He also expressed skepticism of student and activist claims that divestment improves the environment.
“One of the problems is that this demand is put out there without any analysis, without any support,” Swensen said. “There should be a white paper that explains why stopping exploration and development of existing reserves is going to make the climate crisis less severe.”
We know divestment does nothing to help the environment but has real costs for students and faculty. A study by CalTech Professor Bradford Cornell found that, if Yale fully divested, it could cost upwards of $51 million per year.
For now, Yale is holding firm against the empty gesture of divestment and taking a more practical approach to its finances and tangible solutions that support the environment.
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