Yale to start investigating its Chinese investments in light of human rights concerns

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Amay Tewari, Senior Photographer

The committee that recommends areas for divestiture to the Yale Board of Trustees will begin investigating Yale’s stakes in Chinese companies to ensure they are not complicit in the government’s widespread human rights abuses Chinese.

Matthew Mendelsohn ’07, Yale’s chief investment officer, and university president Peter Salovey declined to disclose how much of Yale’s endowment is invested in Chinese companies. However, according to the Investment Office’s 2020 report, it allocates 6.5% of the portfolio, or just over $2 billion, to emerging markets, including China. The New York Times further revealed that from 2015, part of the endowment’s emerging markets portfolio went to two major Chinese companies, Tencent and JD.com. Mendelsohn and Salovey did not respond to a request for assurances that companies receiving investment from the University were absolutely not involved in human rights abuses in China. Since 2017, the Chinese government has engaged in a process of systemic oppression of the Uyghur Muslim population in western China, drawing widespread condemnation.

” We are in the process of [probing Yale’s Chinese investments]said law professor Jonathan Macey LAW ’82. “We’re going to start doing that at the start of the semester.”

The University’s Advisory Committee on Investor Responsibility, or ACIR, is responsible for ensuring that Yale allocates its investments in accordance with social and political norms, and works in tandem with the Yale Corporation Committee on Investor Responsibility, or CCIR, which makes the final investment decisions. practices. Both committees were heavily involved in implementing the University’s new Fossil Fuel Investment Principles in April.

Macey, who chairs CARI, said the committee hadn’t undertaken this investigation until recently because it had focused primarily on the issue of fossil fuel divestment. Although the committee has yet to begin its review, Macey said he suspects some companies will not adhere to Yale’s investment principles.

“My hunch is that there will be a range of activity among the companies and some may be eligible for divestment,” Macey said.

When asked in an interview, Salovey did not guarantee that a company in which Yale invests is not implicated in any of the ongoing human rights abuses in China. However, he said that when the University uses a hedge fund manager in China, the Investment Office “clearly explains our principles to that fund manager” and requires investment transparency.

He added that there is a mechanism through which students can raise concerns about Yale’s investment practices.

“In all regions, we only partner with investment managers who meet our prevailing ethical standards, and our relationships in China are no exception,” Mendelsohn wrote in an email to the News.

Some members of the Yale community have previously called on Yale to sever all financial ties with China, including with private companies, due to ongoing human rights abuses.

According to a report by the Center for Strategic and International Security, “the [Chinese Communist] The Party’s overall goal appears to be to ensure that a wide range of businesses are under the influence of the CCP and willing to work with it to achieve national strategic goals.

Rayhan Asat, a human rights lawyer specializing in China’s Uyghur crisis and former Yale World Fellow, wrote in an email to the News that while private companies have been instrumental in China’s economic growth, the government has started cracking down on them, especially when they “obstruct the specific objective of the Chinese government”.

Macey, however, did not agree with Yale divesting itself of all Chinese businesses.

“I don’t think doing business in China or having a relationship with the Chinese government is automatically grounds for divestment,” Macey said. “They must be associated with a particular violation of human rights or serious social harm.”

Salovey agreed with Macey’s view of the relationship between private and public investment, saying that there is a strong delineation between public and private companies. He further agreed that a company must be actively engaged in causing social harm to justify a divestment.

Salovey also noted that Yale is not alone in investing in Chinese companies, pointing to both other university endowments and mutual funds investing in emerging markets. The investment, like any other foreign investment, involves risks that the University monitors, he said.

“We are watching social and political developments in China,” Salovey added. “We are certainly aware of the relationship between the United States and China. And, in particular, any type of foreign investment activity involves geopolitical risk. And we need to assess that to determine whether it makes sense to invest in other parts of the world.

Still, Asat argued that Yale should hold itself to a higher standard.

“Regardless of the financial imperative to invest in China market funds, Yale should adhere to a basic moral standard,” Asat told the News. “This moral standard demands that even, and especially, when circumstances encourage and reward harmful investments, we must seek other solutions. There is always a choice, and Yale must do the right thing according to its principles, even if it is not easy.

The University has struggled with similar issues in the past. In apartheid South Africa, the University divested itself from a company involved in the production of identity cards used to separate society, according to Salovey. The University also divested from an oil company operating in Sudan, where the government was determined to commit genocide in Darfur.

In January 2021, the US State Department called China’s crackdown on the Uyghur Muslim population a “genocide”.

Deteriorating US-China relations have placed US universities in a precarious position as they aim to continue collaborative work with Chinese scholars while remaining within the legal framework. In December, nearly 100 Yale professors protested the US government’s response to deteriorating relations, denouncing the Justice Department’s China initiative as a threat to academic freedom and as discriminatory against Asian scholars. .

In August 2020, the State Department urged university endowments to divest of Chinese assets, pointing to human rights abuses occurring in China and suggesting that some companies could be delisted from stock exchanges.

“Your institution’s endowment boards have a moral obligation, and perhaps even a fiduciary duty, to ensure that your institution has clean investments and clean endowments,” said Keith Krach, former Under Secretary of State for Economic Growth, Energy and the Environment. , written in the August 2020 letter.

Krach went on to say that “therefore, US university endowment boards would be cautious to divest from PRC [People’s Republic of China] company actions in the likely result that improved listing standards will lead to a mass delisting of PRC companies from US stock exchanges by the end of next year.

Although Yale did not follow the State Department’s recommendations, Mendelsohn made it clear that the University is continuously monitoring this issue.

“We are monitoring social and political developments in China, including and in particular US-China relations,” Mendelsohn wrote in an email to the News. “Geopolitical risk is necessarily a consideration in any foreign investment activity, and China is a priority at the moment.”

ACIR determines the grounds for divestment based on the principles set forth in the 1972 book “The Ethical Investor” written by Yale Professor John Simon and former Yale Professors Charles T. Powers and Jon P. Gunnemann.




PHILIP MOUSAVIZADEH




Philip Mousavizadeh covers Woodbridge Hall, the President’s office. He previously covered the Jackson Institute. He is a sophomore at Trumbull College studying ethics, politics and economics.

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