April 21, 2020

Harvard Continues Longstanding Rejection of Divestment, Looks at New Solutions

Harvard President Lawrence Bacow announced on April 21 that the Harvard Corporation has directed the Harvard Management Company “to develop a plan to achieve net-zero greenhouse gas emissions by 2050” and to prepare to present a plan to the Corporation by the end of 2020. Here are the five things you need to know about the announcement.

1) This is not divestment. Period. President Bacow states the following:

“We appreciate that advocates for divestment from fossil fuel companies may not be satisfied with this approach, but we believe that divestment paints with too broad a brush. We cannot risk alienating and demonizing possible partners, some of which have committed to transitioning to carbon neutrality and to funding research on alternative fuels and on strategies to decarbonize the economy. If we are to develop a productive path forward, we and others will need to work with these companies, recognizing our dependence on their products for the foreseeable future, the nature of the assets under their control, and the special knowledge and expertise they possess. Any effort to put a price on carbon—to offer just one example—will require an inclusive coalition of shareholders, governments, and other stakeholders. Meaningful change cannot begin with a symbolic act that disregards these realities.”

2) Divest Harvard is once again only looking for politicized divestment, not solutions. According to the group, the “announcement falls far short of divestment” and “by not including divestment as one of its commitments today, Harvard is continuing to provide social and economic capital to the forces standing in the way of a decarbonized future.” The group goes so far to say “By evading divestment, Harvard is once again standing with fossil fuel companies and against its students’ futures,” pledging to double down on divestment efforts in days ahead.  This announcement only crystallizes the goals of the divestment movement: make symbolic, political statements regardless of tangible environmental solutions.

3) Harvard is looking at actions, not empty gestures. Harvard is avoiding divestment. Why? Because it is an act that does nothing to support the environment, a fact that President Bacow, former President Drew Faust, and numerous Harvard faculty and students have stated previously.

Just today, Professor of Environmental Policy at Harvard John P. Holdren stated his opposition to divestment, noting “It’s counterproductive because it would lead many Harvard faculty and students to imagine they’d struck an effective blow against climate change—and would likely reduce their focus on more productive measures—when it would actually be a misdirected blow. Just advocating for it is distracting people from measures that would actually be effective.”

4) This announcement is not a surprise. The call for this kind of reporting aligns with the University’s now-official support of the Task Force on Climate-Related Financial Disclosures, the Paris Agreement, and broader on-campus sustainability efforts. Does it mean giving up investments in energy companies? No. It means beginning a process to assess investments and consider options.

Every industry uses energy and, in turn, this review will look at the entire carbon footprint of the portfolio from an array of sectors. As Professor Holdren stated, “If university divestment of fossil-fuel companies were a good idea, surely divesting from all companies that use fossil fuels would be a much better one. Of course, that would entail divestment of virtually all companies in the portfolio.” President Lawrence Bacow has also agreed that working with the industry and fostering research is the best tactic, noting “engaging with industry to confront the challenge of climate change is ultimately a sounder and more effective approach for our university.”

5) The endowment is for students, who will need it more than ever. As this process unfolds, the role and value of the endowment cannot be put aside. An endowment is there to support students and programs, not make political statements. Harvard’s leaders have long stood by this fact.  As this process unfolds, the role and value of the endowment will be paramount.  Former President Drew G. Faust expressed concern about using the university’s endowment as a political weapon for exactly this reason, stating “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.  It should not be used as a weapon to exert pressure on one group or another.”