Yale University has formed an expert committee to guide the university as it evaluates its investment policies in relation to companies producing fossil fuels, President Peter Salovey announced Oct. 22.
The new committee is charged with recommending a set of principles that will inform Yale's Corporation Committee on Investor Responsibility (CCIR) as it applies the university's ethical investment policy to fossil fuel companies. The CCIR works in consultation with the Advisory Committee on Investor Responsibility (ACIR).
The new committee, which will collect input from the Yale community, will begin its work immediately and will deliver the report during the Spring 2021 semester.
After a Feb. 20, 2019, Faculty of Arts and Sciences (FAS) Senate meeting on fossil fuels divestment, the FAS Senate proposed that the president appoint a committee to reexamine ethical investing at Yale with respect to companies that extract or produce fossil fuels.
In Salovey's charge to the Committee on Fossil Fuel Investment Principles (CFFIP), he noted that the changes necessary to avert an irreversible climate catastrophe "cannot be implemented overnight, and depend not only on scientific advancement but also [on] significant political, economic, and personal contributions."
"Nonetheless," he continued, "climate change poses an existential threat to life on our planet, and we have a responsibility to examine whether our investment policies are appropriate or need to be modified with respect to this challenge."
In 2014, Yale, acting in its role as an institutional investor, asked its external investment managers to incorporate the full cost of carbon emissions in investment decisions. At the time, managers were told to avoid investing in companies that disregard the social and financial costs of climate change and that fail to take economically reasonable steps to reduce greenhouse gas emissions.
"Without diminishing the significance of these [past] efforts, I am fully aware that the alarm bells are growing louder, as scientific projections worsen, natural disasters intensify, and governments are slow to develop and implement effective policies," Salovey wrote in the committee charge.
Salovey said the new committee will produce a "concrete framework" for applying to fossil fuel producers the guidelines set forth in "The Ethical Investor," Yale professor John Simon's highly influential 1972 book. That book established general criteria for universities to consider factors beyond economic return when making investment decisions and exercising rights as a shareholder.
The committee will identify the activities, behaviors, and/or characteristics of fossil fuel producers that would constitute "social injury" of such grave character that divestment could be warranted.
"The formation of this committee demonstrates significant concern at the highest level of the university about climate change and a commitment to act proactively," said CFFIP chair Jonathan R. Macey, the Sam Harris Professor of Corporate Law, Corporate Finance and Securities Law at Yale Law School. "Our principles for making decisions related to divestment should reflect changing circumstances and the lack of decisive action by entities such as governments that we might normally rely upon for coordinating the nation's response to existential threats like global warming."
The committee will include experts drawn from the Yale faculty, and may also consult with other experts in relevant fields. Its members, in addition to Macey, are Ruth Blake, professor of Earth & Planetary Sciences, Department of Earth & Planetary Sciences; Benjamin Polak, William C. Brainard Professor of Economics, School of Management, Department of Economics; Mary-Louise Timmermans, professor and director of undergraduate studies, Department of Earth & Planetary Sciences; Xinchen Wang '09, director, Yale Investments Office.
The committee additionally will seek input from the wider Yale community.
"Community involvement will be a central focus of the committee's work," Salovey said. "The committee should propose principles that reflect the deep and valid concerns about global warming expressed by faculty, staff, students, and alumni."
Yale's faculty expertise on climate change and sustainability covers a wide range of disciplines and research topics, including, for example, ice melting in Antarctica and the dynamics of ocean water circulation, environmental justice, public opinion about climate change, and the public health consequences of a warming planet.
In a recent message to the Yale community, Salovey reaffirmed that addressing climate change is one of the university's top academic priorities. Later this year, Provost Scott Strobel will convene the Yale Planetary Solutions Project, bringing together faculty members from the arts, humanities, social sciences, sciences, and engineering to identify strategies for addressing threats facing the local and global environment.
Closer to home, Yale has been a leader in achieving clean energy goals in its own campus facilities and operations. In 2016, Yale committed to becoming carbon neutral by 2050. A year ago, the university formed a task force to review and propose ambitious goals for reducing emissions; specifically, it was charged with exploring how quickly Yale can achieve net zero carbon emissions - a target consistent with the Paris Agreement.
Last year, the university also created a new multidisciplinary laboratory, the Yale University Carbon Containment Lab, that is developing and supporting innovative, scalable solutions to the climate challenge.
"By drawing on the deep expertise of scholars and policymakers at Yale and beyond, and informed by the latest scientific research, the committee will articulate a set of principles to guide our university's investment policies," Salovey said. "I am grateful to Professor Jonathan R. Macey for agreeing to chair this committee and to members of the committee for their important work. I look forward to their recommendations."
