First-of-its-kind report comprehensively quantifies financial implications of BDS-aligned investment strategies for universities.
New York, NY, September 19, 2024 … Adopting an Israel divestment strategy aligned with the Boycott, Divestment, and Sanctions (BDS) movement could lead to significant negative financial implications for university endowments, finds a report released today by JLens, the leading Jewish values-based investor network, part of the ADL (the Anti-Defamation League) family.
The report, the first of its kind to thoroughly quantify these risks, analyzed the historical performance of two hypothetical large-cap U.S. equity portfolios: one broadly diversified without restrictions and another excluding companies targeted by BDS campaigns such as Alphabet, Amazon, Caterpillar, Lockheed Martin and Microsoft. Due to the effect of compounding interest, the 1.8 percent performance gap between the two portfolios (an annualized return difference of 11.1 percent compared to 12.9 percent) translates to substantial differences in returns over time.
The full report includes detailed forecasts for the 100 largest university endowments, if the universities were to invest based on BDS-aligned divestment strategies from 2023 to 2033. For example, Harvard, Yale, Stanford and Princeton are projected to collectively lose more than $8 billion in estimated returns on their endowments over the decade. Brown University, which is actively considering demands for Israel divestment, could miss out on an estimated $309,787,060 in returns on its $6 billion endowment.
These 100 largest U.S. university endowments could collectively forgo $33.2 billion in returns over the next decade if they adopt BDS-aligned investment strategies.
“Calls for universities to divest from companies doing business in Israel are not only morally dangerous, but may also be financially dangerous,” said Jonathan Greenblatt, ADL CEO. “University investment committees have a fiduciary responsibility to prudently steward institutional resources.”
“Our research demonstrates that university endowments that divest from Israel could face significant financial consequences,” said Ari Hoffnung, JLens Managing Director and ADL Senior Advisor on Corporate Advocacy. “Lower investment returns could compromise a university’s ability to provide scholarships, fund research, and invest in campus facilities.”
“This groundbreaking report approaches the morally problematic BDS movement from an entirely new direction - its negative impact on portfolio returns,” said Michael Lustig, Adjunct Professor of Finance at the New York University Stern School of Business and Managing Partner, i4:assemblé. “JLens has done a great job in quantifying the financial effects of implementing the suggestions of this pernicious movement, and importantly, they ‘show their work’ by providing full transparency into their methodology, and properly caveat the points where assumptions must necessarily be made. This report will prove to be an important tool in helping to fight noxious BDS advocacy.”
The Boycott, Divestment and Sanctions (BDS) movement seeks to isolate Israel on multiple fronts: diplomatic, financial, professional, academic and cultural. ADL believes that the movement’s ultimate goal is to delegitimize and pressure Israel, its institutions, and its supporters, including Jewish individuals and community organizations. On campuses, BDS campaigns typically target university endowments, urging divestment from multinational corporations which conduct business in Israel or are accused of supporting Israel’s actions in the West Bank and Gaza. While some BDS campaigns frame demands within broader human rights concerns, they often focus on undermining Israel’s legitimacy.
In 2022, ADL incorporated JLens to expand its participation in the responsible investing and shareholder advocacy fields, and to fight efforts by some activists to push for anti-Israel and antisemitic policies in these fields. JLens, a non-profit organization, empowers investors to align their capital with Jewish values and advocates for Jewish communal priorities in the corporate arena.
About ADL
ADL is the leading anti-hate organization in the world. Founded in 1913, its timeless mission is “to stop the defamation of the Jewish people and to secure justice and fair treatment to all.” Today, ADL continues to fight all forms of antisemitism and bias, using innovation and partnerships to drive impact. A global leader in combating antisemitism, countering extremism and battling bigotry wherever and whenever it happens, ADL works to protect democracy and ensure a just and inclusive society for all. More at www.adl.org.
About JLens
JLens’ mission is to empower investors to align their capital with Jewish values and advocate for Jewish communal priorities in the corporate arena. Founded in 2012 to give the Jewish community a strategic presence in this influential arena, JLens promotes Jewish values and interests, including combating antisemitism and Israel delegitimization, through shareholder advocacy. More at www.jlensnetwork.org.