UPDATED: September 9, 11:03 p.m.
Following years of public pressure, Harvard said Thursday it would allow its remaining investments in the fossil fuel industry to expire, paving the way for it to eventually divest from the sector. The move marks a stark twist in a decade-long saga that has pitted student activists against University administrators and dominated campus politics for years.
In an email to Harvard affiliates Thursday afternoon, University President Lawrence S. Bacow — who has for years publicly opposed divestment — stopped short of using the word divest, but said that “legacy investments” through third-party firms “are in runoff mode,” and called financial exposure to the fossil fuel industry imprudent.
Fossil Fuel Divest Harvard, which has been pushing the University to pull its investments in the fossil fuel industry since it was founded in 2012, declared victory.
“So long as Harvard follows through, this is divestment,” Connor Chung ’23, a Divest Harvard organizer, said. “This is what they told us for a decade they couldn’t do, and today, the students, faculty, and alumni have been vindicated.”
Bacow wrote that the Harvard Management Company, which manages the University’s $41.9 billion endowment, “does not intend” to make future investments in the fossil fuel industry. He said the University would not renew HMC’s partnerships with private equity funds that have holdings in the sector once its current obligations to them expire.
“Given the need to decarbonize the economy and our responsibility as fiduciaries to make long-term investment decisions that support our teaching and research mission, we do not believe such investments are prudent,” Bacow wrote.
Fossil fuels make up less than 2 percent of the University’s endowment — but they won’t disappear overnight.
Per a footnote in Bacow’s letter, Harvard holds a legal obligation to fund “up to the maximum capital committed at the time of the investment,” meaning that its endowment funds will likely go toward completing its obligations to private equity firms that invest in fossil fuels for years to come.
Bacow did not provide a timeline for the liquidation.
The divestment debate has consumed campus in recent years, with supporters of the movement filing legal complaints, storming the field at the Harvard-Yale football game in 2019, staging protests across campus, and gaining seats on school governance boards.
Harvard administrators have long contended the school is best positioned to address climate change through its teaching, research, and campus sustainability efforts. Before Thursday, HMC had not explicitly committed to pulling its endowment funds from firms that invest in the fossil fuel sector.
HMC said in February that it no longer directly invests in the fossil fuel industry, and that its indirect investments in the sector make up less than 2 percent of the endowment. By the end of fiscal year 2020, the endowment’s direct and indirect exposure to the fossil fuel industry had decreased by more than 80 percent since fiscal year 2008.
HMC also previously pledged to achieve net-zero greenhouse gas emissions in its endowment by 2050.
In its February 2021 Climate Report, HMC wrote that it plans to spend the next few years working to gain access to the carbon emissions data from all of its public and private market managers — who have not historically provided this level of information on their portfolios.
In his Thursday letter, Bacow also pointed to the University’s efforts to promote research on climate change, including its appointment this week of economics professor James H. Stock as the first-ever Vice Provost for Climate and Sustainability.
On campus, the University has committed since 2018 to reaching fossil fuel neutrality in its operations by 2026 and eliminating its use of fossil fuels for heating, cooling, and power by 2050. Harvard’s success in decreasing emissions on campus has slowed in recent years, however. Campus greenhouse gas emissions stayed flat between 2016 and 2019 despite reductions over the previous decade, according to data from the Office for Sustainability. The University also fell short of its 2020 waste and water reduction goals.
William E. “Bill” McKibben ’82, founder of climate campaign group 350.org and a former Crimson president, wrote in an emailed statement that Harvard’s “obstinance” in refusing to divest for years cost the University prestige and money.
“Honestly, I thought Harvard would never divest,” he wrote. “That it finally did is an enormous tribute to generations of Harvard students who have never let up, and to faculty and alumni who backed them up.”
—Staff writer Jasper G. Goodman can be reached at firstname.lastname@example.org. Follow him on Twitter @Jasper_Goodman.
—Staff writer Kelsey J. Griffin can be reached at email@example.com. Follow her on Twitter @kelseyjgriffin.