April 3, 2017

Harvard Crimson: Any Case for Divestment “Operates Purely on the Symbolic Level”

Divest Harvard has tried (and failed) several times to compel their University to sell off its fossil fuel investments.  Last week the student group was at work again, blocking the entrances to an administration office building in Harvard Yard.

The purpose of this demonstration was to secure a meeting with university officials and to push Harvard’s endowment to no longer invest in coal and other “dirty energy” industries – despite the fact that the group itself admits Harvard currently has little to no investment in coal.  After meeting with students late last year, two members of the Harvard Corporation confirmed “Harvard does not invest in the coal industry at this time,” but would not commit to divesting from coal in the future.

The recent events prompted the Harvard Crimson, the historic student newspaper, to weigh in on the issue.  In a scathing editorial, the paper criticized protesters and the merits of divestment.  As they note, this is just the latest of several rebuffs to divestment the paper has issued:

“We have expressed our criticism for the strategy of divestment many times in the past. Though the specific demands of Divest Harvard have changed, their underlying philosophy toward combating climate change has not. Simply put, it is the supply of and demand for fossil fuels that creates the market valuations of energy companies, not the reverse. Divestment has no ability to alter these basic economic realities.”

Because divestment has no financial impact on targeted companies, the action of selling Harvard’s investments in fossil fuels—estimated at only 0.2 percent of the overall endowment—can only be seen as a symbolic and empty gesture.  That is because once these shares go on the market other investors will simply acquire the holdings.  From the Editorial:

“In the unlikely event that Harvard’s sale were to temporarily depress the valuation of these companies, the amount of gasoline pumped, electricity used, and heating oil needed would still remain unchanged. So too would the amount of oil drilled, coal mined, and natural gas harvested. Harvard might be the poorer, but emissions would be the same. Any case for divestment therefore operates purely on the symbolic level. Given that Divest Harvard’s most recent protest merely argued for the formalization of the coal investment moratorium Harvard has already instituted, they have conceded as much.”

The Crimson’s Editorial Board also underlined the risky nature of divestment.  Despite having no tangible upside for the University, divestment could have a detrimental impact on students and the University itself. From the piece:

“In more normal times, it might be tempting to see divestment, however ineffective on various levels, as a no-risk option. Suffice it to say that these are not normal times. As Harvard has long argued, using the endowment as a political tool is risky… Such measures would be deeply harmful to the endowment’s ability to finance Harvard’s mission.”

Risky is right. Thanks to research conducted by Prof. Cornell we know just how much divestment would cost Harvard in the long run.  If Harvard sold off its fossil fuel holdings it would amount to loses of nearly $108 million annually translating into a near 16 percent shortfall over 50 years.  Those numbers would no doubt impact Harvard’s ability to dole out scholarships, fund research or expand its faculty.

Harvard also isn’t the only school in the region resisting divestment.  As Divestment Facts has pointed out before, Massachusetts has racked up a pretty dismal record for divestment activists.  Most of the state’s most prominent schools have rejected divestment, including MIT, Tufts, Boston College and Northeastern.

Harvard has consistently seen divestment for what it is: all cost and no reward.  The Crimson has followed suit, encouraging those concerned about the environment to seek practical solutions versus, as they put it, “the impulse to feel good about our high-minded moralism.”