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UC Regents disclose investments in weapons manufacturers amid calls to divest

Members of the UC Investments office disclosed information about the University’s holdings at a meeting of the Board of Regents Investments Committee. (Sam Mulick/Daily Bruin)

By Dylan Winward and Sam Mulick

May 14, 2024 4:53 p.m.

Correction: The original version of this article misattributed Regent Jose Hernandez's statements to Regent Alfonso Salazar.

This post was updated May 21 at 4:31 p.m.

MERCED – UC investment officers answered questions Tuesday from the UC Board of Regents about the University’s investment portfolio.

The UC Board of Regents is holding its monthly meeting Tuesday to Thursday at UC Merced. The Investments Committee meeting is part of the scheduled bimonthly meetings held by the board, but it comes after student protesters set up Palestine solidarity encampments at UC campuses including UCLA, UC Berkeley, UC Davis, UC Santa Barbara and UC Merced demanding UC divestment from companies that they say are associated with the Israeli military.

[Related: SJP and UC Divest Coalition Demonstrations at UCLA]

Merhawi Tesfai, the student regent and a graduate student in social welfare at UCLA, asked the University’s investment officers about responding to demands from students to disclose the university’s financial holdings, particularly in reference to recent student demands of divestment from the state of Israel and its military.

Jagdeep Singh Bachher, the chief investment officer of the UC, said in response that he received five demands regarding divestment from students in a letter sent April 26. He added that if all the demands of the students were met, the University would have to sell $32 billion of its $175 billion portfolio.

Bachher said the University has not made a conscious decision to invest in weapons manufacturers, instead doing so only because investing in stock trackers follows guidelines about responsible investment. The University currently has $3.3 billion in industries categorized as relating to investment manufacturing, he added.

“We haven’t gone out and actively made a decision to invest in weapons manufacturers,” he said. “Our exposure ends up being through the indices, the stock market, and the bond indices, equity or debt we might own in weapon manufacturers. And that comes from looking at what’s in the S&P 500.”

Bachher also disclosed at the meeting that the University invests $163 million in BlackRock – a company that allegedly invests in weapons manufacturers and allegedly has ties to the Israeli military – through a passive index. The University also invests $2.1 billion managed by BlackRock through a fixed income portfolio, he said.

The University has directly invested $8.6 billion in Blackstone, a company that union activists say participates in predatory renting practices, Bachher said.

Bachher said students listed 24 companies they said they also wanted the university to divest from. The companies, which include Coca-Cola and Disney, currently represent $3.2 billion of the university’s investment portfolio.  

UC Divest Coalition at UCLA and Students for Justice in Palestine at UC Merced did not respond in time to requests for comment.

James Steintrager, the faculty representative to the regents, also asked whether the UC investment teams would prioritize environmental, social and governance policies – which govern ethical investing – over financial benefits for the university. 

Bachher said if faced with the choice, he would prioritize investment returns and mitigating financial risks.

“We are very black and white,” he said. “The only way we can have these conversations is we can begin with a framework. We can have a clear view on how we implement that from a financial risk perspective and an investment return perspective. And then we engage with all of you – particularly our faculty (and) our staff, who we manage those assets for.”

However, Bachher also said the University has previously sold assets related to fossil fuel companies, something which he has written about in an op-ed in the Los Angeles Times. Although the University did not divest from all companies that are tangentially related to fossil fuel industries, it has tried to reduce the amount of money the UC invests in associated industries, he said.

Alumni Regent Keith Ellis said he believes students should attempt to influence the university’s portfolio through the UC Investments Academy. The academy, a project through the UC Office of the President, allows students to participate in managing the University’s portfolio.

Ellis also acknowledged that some alumni members have recently threatened to withhold donations. He added that although he does not agree with withholding donations, he believes the University should use its influence where possible to convince companies it invests in to make more ethical decisions.

Regent Jose Hernandez echoed Ellis’ sentiments and said he feels the University should do a better job of explaining the difficulties of divestment to students. 

“We need to do a better job at communicating that to the students and saying, ‘Look, here’s the information,” he said. “Given the political climate that we’re in, we ought to be looking at any future investments that we’re making. Let’s put the brakes on these types of investments right now until things get more clarified and settle down.”

At the meeting, Bachher also shared the executive summary of the UC’s investment portfolio, which stated the University’s investment portfolios had increased by $18.2 billion in the previous year and now stand at $177 billion. According to the summary, University investment assets have grown by 86.3% since 2014.

The summary also said the UC pension had grown by 9.7% in the last year.

Hernandez said as a pension recipient, he would like the University to divest from the 18% of its holdings that are associated with the military.

Bachher responded by saying he believes it would not be fair to pensioners who do not believe in divestment to consider factors other than fiscal responsibility when making decisions. A divestment decision that did not receive approval from the UC Academic Senate or a majority of UC pension holders would be highly controversial, he added.

Bachher also said he feels apolitical decision-making from the regents is important given the instability of the current political climate. However, he added that he would work toward divestment if the regents instructed him to do so.

“We are humble servants of the Board of Regents in … what we do on a daily basis,” he said. “I’ve always believed we manage money for a client. You’re the client. If you choose to give us those instructions, I can confidently tell you – who are we to tell you not to do it?”

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Dylan Winward | News editor
Winward is the 2024-2025 News editor and an Arts, Copy, Photo, PRIME and Sports contributor. He was previously the 2023-2024 features and student life editor. Winward is a third-year English and statistics student from London in the United Kingdom.
Winward is the 2024-2025 News editor and an Arts, Copy, Photo, PRIME and Sports contributor. He was previously the 2023-2024 features and student life editor. Winward is a third-year English and statistics student from London in the United Kingdom.
Mulick is a news contributor on the features and student life beat. He is also a third-year sociology student from northern New Jersey.
Mulick is a news contributor on the features and student life beat. He is also a third-year sociology student from northern New Jersey.
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