Yale to Investigate Chinese Investments Over Human Rights Concerns

A university committee will determine if any companies are ineligible for investment from its $42.3 billion endowment.

Yale University said it will look into Chinese companies to determine if they are ineligible for investment due to human rights abuses.

According to student newspaper the Yale News, the university’s Advisory Committee on Investor Responsibility, which provides divestment suggestions to Yale’s board of trustees, recently decided to look into Chinese investments in addition to its main focus of potential fossil fuel-related investments.

“We’re in the process of [probing possible Chinese investments],” Yale law professor Jonathan Macey, who is chair of the ACIR, told the Yale News. “We’re going to be starting to do that early in the semester.” Macey added that “my intuition is that there’ll be a range of activities among companies and that some might be eligible for divestment.”

Although Yale’s investment office doesn’t report how much it invests in Chinese companies, the $42.3 billion portfolio allocates 6.5% to emerging markets, which would cover any investments in Chinese companies, according to the most recent annual endowment report. The report said its emerging markets portfolio is benchmarked against a combination of the MSCI Emerging Markets Investable Market Index and the MSCI China A Share Investable Market Index.

The ACIR is tasked with verifying that the university allocates its investments based on certain social and political standards. It also works in cooperation with the Yale Corporation Committee on Investor Responsibility, which makes final decisions on investment practices. Both committees had major input in implementing Yale’s new fossil fuel investment guidelines last April.

“In any geography, we partner only with investment managers who meet our sterling ethical standards, and our relationships in China are no exception,” Yale CIO Matthew Mendelsohn told the News. “We are monitoring social and political developments in China, including and especially US–China relations. Geopolitical risk is necessarily a consideration in all foreign investment activity, and China is a top focus at the moment.”

In August 2020, the then-US State Department Under Secretary Keith Krach sent a letter to the governing board of US universities calling on college endowments to divest from Chinese companies holdings, citing human rights abuses and indicating that some of the companies might be delisted from US markets. Krach noted that Chinese firms, unlike other foreign issuers in the US, do not follow audit transparency requirements.

“I urge you to divest from companies that are on the entity list or that contribute to human rights violations,” Krach said in the letter. “I also ask that you strongly consider publicly disclosing to your campus communities immediately all Chinese companies that your endowment funds are invested in, especially the Chinese companies in emerging markets index funds.”

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