Harvard president says university will not divest from fossil fuel industry, despite pressure from some on campus
Harvard University President Drew Faust announced Thursday that the institution will not divest from the fossil fuel industry despite pressure from some students and faculty to do so.
“While I share their belief in the importance of addressing climate change, I do not believe, nor do my colleagues on the corporation, that university divestment from the fossil fuel industry is warranted or wise,” Faust wrote in a letter to the campus community.
She said she “very much respects the concern and commitment show by the many members of [the Harvard] community who are working to confront” climate change.
Faust wrote that the university’s priority is its academic mission and that its endowment’s funds are intended “to advance academic aims, not to serve other purposes, however worthy.”
“The endowment is a resource, not an instrument to impel social or political change,” she wrote. “Conceiving of the endowment not as an economic resource, but as a tool to inject the university into the political process or as a lever to exert economic pressure for social purposes, can entail serious risks to the independence of the academic enterprise.”
She said that the “strength and growth” of the endowment, which pays for more than one-third of Harvard activities each year, is crucial to the support and opportunities the university can provide to its students, faculty and researchers.
And, “Despite some assertions to the contrary, logic and experience indicate that barring investments in a major, integral sector of the global economy would — especially for a large endowment reliant on sophisticated investment techniques, pooled funds, and broad diversification — come at a substantial economic cost,” Faust wrote.
Faust said it would also be contradictory to boycott investing in an industry that produces products, which many people, as individuals, and institutions, including Harvard, rely on 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,” she said.
She said she worried divestment would not be a solution to climate change, but would instead “distract us from more effective measures, better aligned with our institutional capacities.”
“Universities own a very small fraction of the market capitalization of fossil fuel companies,” Faust added. “If we and others were to sell our shares, those shares would no doubt find other willing buyers. Divestment is likely to have negligible financial impact on the affected companies.”
“Generally, as shareholders, I believe we should favor engagement over withdrawal. In the case of fossil fuel companies, we should think about how we might use our voice not to ostracize such companies but to encourage them to be a positive force both in meeting society’s long-term energy needs while addressing pressing environmental imperatives,” she added.
Faust said she believes there are “a number of more effective ways” than divestment for Harvard to address climate change and enhance its investments in sustainability.
“Our teaching and research on environmental and climate issues is significant and growing, and it is a priority in The Harvard Campaign,” the university’s recently launched $6.5-billion fundraising effort, she said.
Faust listed the many courses, programs and research that center around environmentally-friendly causes. She named numerous ways the university and its physical campus are going green and honoring individuals who contribute to the cause.
“I am very proud of all that our students and faculty and staff are doing on this front, and those efforts will continue and grow.”
She said the university needs “to strengthen and further develop our approach to sustainable investment.”
“This is no small undertaking, and it will present challenges along the way,” Faust wrote. “And, like other investors, we should consider how to obtain further, better information on how companies not only in the energy industry but across all sectors take account of sustainability risks and opportunities as part of their business strategies and practices.”
She said toward that end the Harvard Management Company recent hired its first-ever vice president for sustainable investing to “help us think in more nuanced, forward-looking ways about sustainable investment, including the consideration of environmental, social, and governance factors.”
“Harvard has a strong interest in marshaling its academic resources to help meet society’s most important and vexing challenges, and there is no question that climate change must be prominent among them,” Faust’s letter concluded. “We will continue to do so, through the energy and ideas of our faculty, students, and staff, in ways that are true to the purposes of our endowment and that best take advantage of the university’s distinctive capacities as an academic institution.