California Regents Break with Yale on Ethical Investing

In early September Jagdeep Singh Bachher, chief investment officer for the University of California Board of Regents, announced near the end of an investment committee meeting that the office haddivested all its direct coal and tar sands holdings，销售股票总额略低于2亿美元。

The news caught climate activists, including author and environmentalist Bill McKibben, by surprise.

Um, developing story: it looks like the Univ of California is divesting its enormous portfolio from coal and tarsands oil. If true--wow

- Bill Mckibben（@Billmckben）September 10, 2015

“Um, developing story: It looks like the Univ of California is divesting its enormous portfolio from coal and tar sands oil. If true—wow,” he tweeted September 9, the day of the UC investment committee meeting. The next day he added:

Today's shock news from UC means many of US's most iconic campuses on divestment path: Berkeley, UCLA, UCSB, Davis, UCSF, Irvine, many more

- Bill Mckibben（@Billmckben）September 10, 2015

UCLA教师上的朋友发送了一封电子邮件，简称为“绿色”。

Carbon divestment一直是一个越来越多的学生和环境活动家的拉力般的呐喊超过三年。这些运动是由Mckibben 2012案文的镀锌滚石，“全球变暖的恐怖新的数学”，这是一个特别适合武装的呼唤千禧一代。事实上，担任大约980亿美元的养老金和其他资产的赫赫的决定不会直接影响其他UC捐赠，例如加州大学联盟和伯克利的其他UC捐赠，这些植物和伯克利分别管理。但这是一个很大的交易，而不仅仅是因为剥离。更重要的是它对加州大学系统现在如何观察可持续性的所说。

Almost a year and a half ago, Stanford University in Palo Alto, California,宣布它会寻求剥离其直接煤炭持股并没有更多的化石燃料的投资。加州大学的commitment is more far-reaching but occurred with less fanfare. UC’s step also contrasts with many other endowments across the country, notably from standard-bearers such as Yale and Harvard, which have not divested their carbon assets, despite coming under pressure from students and other stakeholders.

The UC announcement is symbolic. As I explained in my April 2014亚博赞助欧冠feature on carbon divestment, “气候变化和化石燃料剥离运动,” the university, notably the University of California, Berkeley, played a pivotal role in the 1980s campaign to divest from companies doing business with apartheid South Africa. That earlier campaign was an inspiration for the current climate divestment push. A sustained effort from students, supported by faculty, prompted the Board of Regents to take up the question of climate change in 2014, shortly before Bachher was hired as CIO.

UC’s legacy might now come in the form of a new way of thinking about environmental, social and corporate governance (ESG) policies in investing and make the university system the thought leader for the next generation of fiduciaries.

At the September 9 investment committee meeting, Bachher presented a policy paper, “Sustainability Impacts Investment,” that makes clear that the CIO’s office views sustainability factors as part of a prudent investment approach. “We have learned that strengthening the environmental sustainability, social responsibility, and prudent governance component of our risk evaluation improves the clarity of our analysis,” argues the paper. Markets change, and investors should adapt to new inputs, such as the risk of so-called stranded carbon assets — carbon assets on the books of fossil fuel companies that can currently not be burned because of atmospheric carbon level limits — to portfolios.

自20世纪80年代中期以来，当耶鲁大学的投资办公室雇用华尔街衍生品交易员David Swensen作为CIO，他和他的团队开创的所谓的捐赠组合模型被列为机构投资的黄金标准。许多主要机构采用了这种方法：各种投资组合，对替代品，包括对冲基金和私募股权，以及对外部投资经理的繁重依赖。

Theendowment investment model鼓励投资者雇用最好的金钱经理，并允许他们完成工作。这个想法是，经理是专家，在长远来看，他们和市场将考虑任何材料外部性。如果说，碳风险是一个问题，市场将在适当的时候弄清楚。任何不是材料的东西，例如使用孩子挑选可可豆，并不相关，在投资决策中没有任何地方。

Most universities have a mechanism for dealing with environmental and social concerns that students and other stakeholders bring to the table. As with investing, Yale pioneered this mechanism by forming an Advisory Committee on Investor Responsibility in 1972 to deal with “the ethical responsibilities of institutional investors.” The committee was established following the advice set out inThe Ethical Investor: Universities and Corporate Responsibility, by John Simon, Charles Powers and Jon Gunnemann and published by Yale University Press in 1972. The book was a response by the university to the then-emerging South Africa divestment campaign.

As quoted on the committee’s web site, the ethical investor principle allows the consideration of factors “other than maximum financial return” in the case of “social injury.” Consider child labor. We can agree that the use of child labor causes grave social injury, and that we should divest from a chocolate manufacturer that employs children. However, divestment would only be warranted if the company is the direct cause of the injustice. If the cocoa manufacturer is just buying the material from a third party, which uses child labor, then divestment should not occur.

Most injustices happen at arm’s length. As an institution, it is impossible to divest from everything. In practice, the policy means endowments very rarely take a stand (the most common exceptions are divestment from companies doing business in the Republic of the Sudan, tobacco stocks and some proxy voting). The existence of the advisory committee as a sort of ethical safety valve allows uncomfortable issues to be swept aside. The discussion resembles armchair philosophizing: Should I divest from my cocoa manufacturer if it means that many of the children picking plants wind up in prostitution? Which is a greater injustice?

问题应该是，需要碰巧供应链，以确保不使用童工，以及我们如何支持社区可以获得合理工资的方式，并且不必将孩子送入劳动力？那些是善的问题的类型（在道德和金融术语中）公司花费相当长的时间和努力摔跤。像这样框架，ESG成为企业风险，从而成为一个机会。

Like UC, Yale has come under pressure to divest its carbon holdings. Last August it announced its policies for dealing with the issue. Relying on the principles set out inThe Ethical Investor，咨询委员会发现，从化石燃料公司中剥离并不保证，因为它们只是间接的行动者和更大问题的受益者。“如何通过特定公司确定化石 - 燃料燃烧的净社会伤害影响，以及如何识别负责导致造成伤害的增量排放的公司（以及因此应该持有责任的公司）是难以充满困难的问题，”耶鲁在声明中说，强调捐赠的管理人员需要意识到气候风险“作为合理的商业惯例。”

耶鲁puts the question of divesting in an ethical box, assuming that managers and markets will take care of any economic problems. The model presumes a rational market with no informational blind spots over, say, how to price carbon risk. Yale went on to lay out all the ways in which the university community could and should help tackle global warming, but it did not suggest that the institution’s knowledge or expertise on the topic might be brought into the Investments Office.

Unlike Yale, UC is flexible. It moves away from the tortured notion of social injury; allows that values, like ethics, can have a place in the investment office; and sees that so-called nonfinancial factors may actually be valuable when thinking about investment decisions and risk mitigation. It also, crucially, takes away some of the agency from the money management community and puts it back with the institution itself.

自从成为CIO以来的承诺已经提出的承诺之一是利用UC系统的资源，以获得办公室的利益。这包括寻找合作伙伴和顾问，例如加州大学管理层管理学院管理层和加州大学的能源和可持续发展执行主任的艾米Myers Jaffe，以及全球能源政策专家，地缘政治风险和能源和可持续性。

UC’s radical thinking suggests that people like Jaffe, who helped develop Bachher’s policy paper and is now working with UC climate experts to explore the effect a carbon price might have on the portfolio, have valuable insights on climate risk. It dares to say that Jaffe and others are likely to be more knowledgeable about these issues than the average money manager or investment consultant, and that the investment office might benefit.

显然，摆锤可以摇摆太远的方式。如果每个投资于他的对冲基金公司，孤牌资本的每个机构都会骚扰斯蒂芬·德国，开始致电他分享他们的专业知识。但是，鉴于耶鲁等机构发出的全动甲板哭泣，以应对气候危机，你会认为是时候考虑一​​些新的声音，特别是当这些专家近在咫尺。金钱经理在需要时支付教授作为顾问;现在可能是大学向内了解以利用气候变化的专业知识。