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January 14, 2021

Here’s a Look Back at Divestment in 2020: What’s Next?

Over the last year we saw a flurry of divestment activity that is indicating where the movement is headed. From coast to coast, many colleges remained opposed to taking on activists’ calls for divestment. Some, however, did not.

Here’s a review of the major divestment themes we saw in the crazy year that was 2020, and what we can expect in the year ahead.

High Profile Announcements Without Much Bite

One of the biggest surprises of the year was in-fact not from the Ivy Leagues, but from Georgetown University, located in the heart of the nation’s capital.

Back in February, Georgetown announced that by 2030 it would not be making any new investments in fossil fuels. It also stated it would remove any current fossil fuel holdings from its investment portfolio as well. Initially activists cheered in support of the administration’s announcement. But, in hindsight, this can’t help but seem like just another empty gesture.

A few months later, the student newspaper reported that despite this high profile pledge, Georgetown remained heavily invested in the fossil fuel industry, and would be so for some time due to the complicated nature of purging portfolios of an entire economic sector.

Speaking of empty gestures, Georgetown was not the only academic institution to make a quasi-divestment announcement in 2020 either. George Washington University announced it would divest within the next 5 years. Cambridge University, Brown, and Oxford also heeded to years of pressure by activists and announced they would divest as well. That’s about it in terms big-name institutions who made full-out commitments to eventually divest from fossil fuels.

Some Big Time Rejections

And while a handful of schools said they would divest; many came out in opposition, some for the third or fourth time. Harvard, Yale, Princeton, Stanford, Boston College, are a handful of institutions, just to name a few. However, in 2020 specifically, more and more institutions opted against full divestment and instead chose a more realistic policy of investing in sustainability. Thus, for 2020, institutions and pension managers laid out the foundation for the net-zero emissions movement. Essentially, it’s a commitment to do exactly as it implies; by a certain date all investments and energy consuming activities will have net-zero carbon emissions, without excluding nor rejecting fossil fuels’ involvement.

The Harvard Approach. An environmentally sound policy that doesn’t play politics

Harvard has consistently rejected divestment for years. So, what made this year any different from the rest? Back in April, Harvard was one of the first institutions to develop an alternative net-zero approach to investing versus blanket divesting. In a letter penned by The Harvard Corporation and President Bacow, Harvard essentially tasked the group responsible for overseeing Harvard’s endowment to devise a plan that would achieve net-zero greenhouse gas emissions by 2050 and present that plan to the Harvard Corporation by the end of 2020.

And although a full disclosed plan is not publicly available yet, Harvard continues favoring engagement and collaboration over divestment. For instance, Harvard’s own endowment managers have hinted that further research and partnership with the industry is needed to advance carbon sequestration technologies to offset emissions.

Financial experts have been clear on divestment’s inefficiency. Collaboration is a sounder strategy.

Unlike some who urge full and immediate divestment despite the costs, financial experts, luckily, acted as the voice of reason in 2020. Divestment, a financial decision, requires a deep understanding of markets dynamics and asset management to provide sound economic advice.

To start with, Moody’s, the world’s top credit rating agency, reported that divestment was “not a significant factor” for fossil fuel companies’ finances, discrediting climate activists’ claims about the miraculous financial effects of divestment over oil and gas companies.

What’s more, financial experts have not only called divestment pointless. From a very practical, business perspective, they’ve acknowledged the role the oil and gas industry will play in achieving the low-carbon transition. For instance, Bloomberg | Quint’s financial writer Nathaniel Bullard sees value in continuing to invest in these companies:

“Now it’s clear the focus should be less on divestment from the fossil fuel sector and more on reallocation to companies that are planning to create value from the low-carbon transition. That doesn’t necessarily exclude the energy sector.”

In a similar fashion, during the World Pension Summit 2020, asset owners and financial experts agreed that it was more important to engage with the industry than to divest. In fact, focusing exclusively on punitive measures like divestment “was not the desired course of action to ensure responsible investing”.

Either from a pure business strategy, or because you are truly interested in funding the next low-carbon technologies, divestment isn’t the right way to go.

Divestment’s crowning achievement is simply not divestment

New York’s pension funds have a bone to pick with proponents of divestment. For years, both New York state and local pension funds have been an area of focus by anti-fossil fuel activists pushing for divestment.

So when New York State comptroller, Thomas DiNapoli, introduced a 2040 net-zero emissions plan in December, divestment advocates quickly called this an absolute win. However, they forgot to read the fine print. In fact, DiNapoli’s plan is a review process to establish baseline criteria to judge investments in certain sectors. Not a commitment nor an announcement to divest.

DiNapoli has fiercely defended his fiduciary duty and avoided the divestment path at all costs. In his view, the plan announced is a commitment to make the NYS pension fund’s investment policy more sustainable without compromising the assets of over 1.1 million New Yorkers. Divestment instead would be the irresponsible approach.


Full divestment is a thing of the past. Top universities, state and local pension funds and financial experts agree that divestment is both ineffective and insufficient to address climate change concerns adequately. However, moving forward we expect more flexible decisions like that of Harvard and the New York State pension fund, capable of integrating higher sustainability standards while continuing important research and technology opportunities with the industry.