Yale University
PA-9: Committee on Investor Responsibility

Yale was one of the first institutions to address formally the ethical responsibilities of institutional investors. In 1969 Professors John Simon, James Tobin, William Brainard, and Charles Lindbloom along with Yale graduate students Charles Powers and Jon Gunnemann conducted a seminar entitled "Yale's Investments," which explored the ethical, economic, and legal implications of institutional investments. As a result of the seminar, Messrs. Simon, Powers, and Gunnemann wrote The Ethical Investor: Universities and Corporate Responsibility. Published in March 1972 by Yale University Press, the book established criteria and procedures by which a university could respond to requests from members of its community to consider factors in addition to economic return when making investment decisions and exercising rights as shareholder.

The Yale Corporation adopted the guidelines outlined in The Ethical Investor in April 1972 and Yale became, according to the New York Times, "the first major university to resolve this issue by abandoning the role of passive institutional investor." The book subsequently served as a blueprint for the ethical polices of a number of universities.

In the 1972-3 academic year, as suggested in The Ethical Investor, Yale established the Advisory Committee on Investor Responsibility (ACIR). The inaugural committee addressed social responsibility issues ranging from company investment in South Africa, to defense contracting, political lobbying and environmental safety. Later the Yale Corporation formed the Corporation Committee on Investor Responsibility (CCIR).

The CCIR is composed of Fellows of the Corporation. It recommends policy to the full Corporation and is charged with implementing approved policy. In discharging its responsibility, the CCIR is assisted by the ACIR. The ACIR is composed of two students (one undergraduate and one graduate), two alumni, two faculty, and two staff members.

Jonathan Macey (Chair, faculty)
Darcy Frisch (alumni)
Lucas Swineford (staff)
Elon Boms (alumni)
Amber Howell (student )
Steven Tian ( student)
Patricia Pedersen (staff)
Harry Stout (faculty)

Academic Year 2018-19 Review
Over the course of the year, the ACIR held a number of meetings, including the annual open forum in December 2018. The annual open forum provides an opportunity for the members of the Yale community to express concerns or raise questions related to the ethical investment of Yale’s Endowment.

Following the adoption of proxy guidelines for issues relating to private prisons by the Yale Corporation in June, 2018, the ACIR continued its dialogue with the student group Yale Students for Prison Divestment.

After receiving a request from a Yale faculty member, the ACIR investigated ethical investment issues related to retailers selling assault weapons to the general public and found that such activity constitutes grave social injury warranting further action. The ACIR presented the results of its investigation to the CCIR, and in August 2018, the Yale Corporation adopted a policy mandating that Yale not invest in any retail outlets that market and sell assault weapons to the general public.

The ACIR investigated whether investing in distressed Puerto Rican debt would conflict with Yale’s ethical investment policies and found that such investments would not constitute grave social injury warranting any further action.

The Committee also looked into the health risks associated with vaping, finding evidence that non-combustible tobacco products like e-cigarettes can be as addictive as conventional tobacco products. Moreover, the Committee concluded that the practices of some companies that manufacture and sell vaping products especially appeal to minors who are disproportionally affected by the negative health risks posed by these products. Following a request for clarification from the ACIR, the CCIR affirmed in February 2019 that Yale’s existing guidelines on voting the of tobacco proxies extends to non-combustible nicotine products.

The ACIR continued to monitor Yale’s Sudan divestment list.

The Committee continued to review and vote on the University’s social responsibility proxies in accordance with the University’s ethical investment policies, including the guidelines set forth in John Simon’s The Ethical Investor.

Calendar Year 2018 Voting Overview
The ACIR votes social and ethical proxies on behalf of the University in accordance with existing University policies and under the guidance of the CCIR. The ACIR is composed of representatives from the University alumni, staff, faculty, graduate and undergraduate student communities. The CCIR is a standing committee of the Yale Corporation.

Guided by the principles of John Simon et al., The Ethical Investor (1972), and related policies and practices adopted by the University, in particular the “Statement on Proxy Resolutions,” adopted by the Corporation in 1989 and updated in 2013, the ACIR considers proxy resolutions and determines whether it is appropriate for Yale to take a formal position on a social or ethical issue through its role as corporate investor.

Votes affirmatively supporting proxy initiatives must be preceded by a determination that the issue involves one of substantial social injury caused by the company; the issue is susceptible to competent evaluation by the University under criteria reflecting broad moral consensus within the academic community; and the proposed resolution seeks to eliminate or reduce the social injury by means which are found to be reasonable and effective. A proposal will not be supported where the resolution embodying the proposal fails to be well-constructed or appropriately tailored to reduce or eliminate the injurious aspect of the activity (e.g., is over-inclusive or is merely a condemnation).

In addition, proxy initiatives will not be supported where the resolution would impose a serious competitive disadvantage on the company in relation to other companies in the same industry which are engaging in similar social injury; the resolution advances a position on a social or political question unrelated to the conduct of the company’s business or the disposition of its assets; the activity in question neither violates nor frustrates the intent of governing laws and regulations that represent a balance struck in the context of competing political influences in a democratic society; or, if the activity is unlawful, it is already or will imminently be the subject of legitimate legal processes.

In the event that the Corporation or CCIR has provided specific guidance with respect to voting on a particular issue (e.g., tobacco, climate change), the ACIR will follow that guidance. In addition to reporting the ACIR’s proxy votes to the CCIR on at least an annual basis, the ACIR should bring to the CCIR’s attention any social or ethical matter requiring more specialized voting instructions.

In calendar year 2018, the ACIR considered and voted on proxy resolutions consistent with the principles described above in environmental practices, diversity, decent work, executive compensation, and human rights. The ACIR does not vote on proxy resolutions addressing corporate governance or other matters not involving social or ethical issues. These proxies remain within the purview of the Investments Office, with oversight by the Investment Committee.