News articles emerged this week reporting that Harvard Board of Overseers member, Kat Taylor, is calling for the University to divest from fossil fuel holdings, with Reuters calling the public rebuke a “rare” move. Taylor also posted an opinion piece in the Harvard Crimson outlining her position. Worth noting, the Board of Overseers does not have any direct influence over Harvard’s endowment.
Taylor happens to be the wife of prolific billionaire environmentalist and political donor Tom Steyer, who has also been active in promoting divestment. We’ll set aside some of the known biases for the time being – though you can read some things HERE, and HERE – and instead focus on how just about everyone in the academia and the economic spheres stand against Steyer and Taylor’s position.
Let’s start in 2013, when Harvard President Drew Faust made a sweeping and robust rejection of divestment on behalf of the university. From her remarks:
“The endowment is a resource, not an instrument to impel social or political change … I also find a troubling inconsistency in the notion that, as an investor, we should boycott a whole class of companies at the same time that, as individuals and as a community, we are extensively relying on those companies’ products and services for so much of what we do every day.
“Given our pervasive dependence on these companies for the energy to heat and light our buildings, to fuel our transportation, and to run our computers and appliances, it is hard for me to reconcile that reliance with a refusal to countenance any relationship with these companies through our investments.”
In a 2015 Q&A with the Harvard Gazette, President Faust again reiterated this stance, noting:
“I don’t think that divestment is an appropriate tool, because I don’t think the endowment should be used for exerting political pressure. It is meant to fund the wide range of activities that the University undertakes. As we said before, 35 percent of our operating budget comes from the endowment. That is why people gave their funds to create the endowment. It should not be used as a weapon to exert pressure on one group or another.
“There are many dangers and it has little effective outcome. What would it mean if we sold our investments? Very little, because there are plenty of other people who will invest in those firms.”
In April 2017, activists seized on comments made by Harvard Management Company’s head of natural resources, Colin Butterfield, when he noted the university was “pausing” investments in some fossil fuels. But despite celebrations by the likes of Bill McKibben and others, a Harvard spokesperson was forced to clarify the university’s position and reiterate its opposition to divestment, stating “It certainly was not a change in Harvard’s stance on divestment from fossil fuels, which was laid out in 2013 and remains the university’s position.”
Harvard is not alone in resisting calls to divest from fossil fuels. In recent years the movement has failed to gain any traction and has suffered several high-profile misses. That is because divestment is not only ineffective, but carries substantial costs for universities to consider.
According to a report by Caltech professor Dr. Bradford Cornell, divestment would cost Harvard, Yale, MIT, Columbia, and NYU collectively more than $195 million for each and every year the portfolios are active in the market. Of that group, Harvard’s loss would be the most pronounced, equaling roughly $107 million per year.
What’s more, the director of Harvard’s own Environmental Economics Program, Robert Stavins, agrees the “divestment movement is fundamentally misguided…We should be focusing on actions that will make a real difference.”
So, while billionaire activists may want to push for the pointless policy of divestment, academics, economists and those responsible for the well-being of Harvard’s endowment all disagree. The facts speak for themselves: divestment carries high costs for students and universities, and has no impact on the environment. No wonder Harvard has been smart enough to say no to this costly, empty gesture.