Harvard to Phase Out Fossil Fuel Investments

Harvard to Phase Out Fossil Fuel Investments

In a recent missive, Harvard University announced that it aims to avoid new investments in fossil fuels. In the past, Harvard has resisted taking environmental concerns into account when investing its $42 billion endowment. But the university's president, Lawrence S. Bacow, emphasized in an email, "climate change is the most consequential threat facing humanity."

Why this Matters

University endowments are not taxed, so many feel that they should be used to contribute to the public good. Some of these endowments -- like Harvard's -- are large enough to be forces for change. Despite being both the world's richest university and one of its most prestigious, Harvard has been slow to act on making a commitment to divest from fossil fuels. It now joins its peers Oxford, Cambridge, Brown, and Cornell who all began divesting last year. Havard's decision will now no doubt encourage other universities to divest as well.

"People do pay attention to what Harvard does," said Danielle Strasburger, the co-founder of Harvard Forward, an alumni divestment movement, to the New York Times.

Activism Prevails

In a recent election for the Harvard Board of Overseers, the group Harvard Forward succeeded in campaigning for four pro-divestment candidates, which helped move the university towards this decision.

President Bacow also emphasized that the Harvard Management Company (HMC), which manages the university's endowment and investments, has already been phasing out fossil fuels: "HMC has no direct investments in companies that explore for or develop further reserves of fossil fuels. Moreover, HMC does not intend to make such investments in the future."

Bacow also said that fossil fuel investments are not "prudent," suggesting there were also financial incentives for divestment. According to the New York Times, "the HMC has some legacy investments, as a limited partner in a number of private equity firms with holdings in the fossil fuel industry, amounting to less than 2% of the endowment." The university plans to build a portfolio of investments in funds that support the transition to a green economy.

Harvard Alumni Association: Moving Climate Action Forward - Will We Get the Job Done?, January 20, 2021. (Welcoming remarks by Aaron Bernstein, Interim Director, Center for Climate, Health, and the Global Environment at the Harvard T.H. Chan School of Public Health.)