The Washington Post

Harvard says it will stop investing in fossil fuels

- BY NICK ANDERSON AND MICHAEL BIRNBAUM nick.anderson@washpost.com michael.birnbaum@washpost.com

Harvard University said this week that it will end all of its investment­s in fossil fuels, a landmark victory for climate activists who have lobbied major colleges and universiti­es to stop funding activities that help drive global warming.

The action is likely to have ripple effects in higher education and beyond, given Harvard’s $41 billion endowment and its iconic status among American institutio­ns. For years, Harvard resisted calls to cut off funding for oil and gas firms despite demands from many students, alumni and outside advocates.

“We must act now as citizens, as scholars, and as an institutio­n to address this crisis on as many fronts as we have at our disposal,” Harvard President Larry S. Bacow said Thursday in a statement to the university community.

Bacow said the university has ended all direct investment in companies that explore for fossil fuels or develop them, and will not reenter that sector.

“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 said.

Harvard also plans to allow its remaining indirect investment­s in the fossil fuel industry — through private equity funds — to lapse without renewal. Those indirect investment­s account for less than 2 percent of the endowment and are shrinking, Bacow said.

Bacow set no date for when the indirect investment­s would end, and he did not use the words “divest” or “divestment.” But together, the actions amount to a major reversal for a university that had not taken a definitive, zero-investment stand on fossil fuels up until this point.

Activists hailed the developmen­t as a hard-won victory.

“Harvard is really a very potent symbol of the status quo,” said Richard Brooks, climate finance director for Stand.earth, an environmen­tal organizati­on based in San Francisco. “With this move, they have shifted the status quo. That’s where the power of this announceme­nt and this change really lies. The bar has shifted. The mainstream has moved further toward climate action.”

The American Petroleum Institute, which represents the oil and natural-gas industry, made the case for institutio­ns to not follow Harvard’s lead.

“Natural gas and oil power our global economy, which is why most investors and banks are focused on working with our industry to achieve ambitious climate goals together,” API spokeswoma­n Bethany Aronhalt said in a statement. “We will continue to partner with the financial community on a diverse and broad set of energy solutions that will require new approaches, new policies and continuous innovation.”

The industry supports “tackling the climate challenge,” Aronhalt said, through actions such as “reducing emissions, advancing cleaner fuels, investing in groundbrea­king technologi­es and advancing the direct regulation of methane as well as economywid­e carbon pricing.”

Harvard students involved in the climate fight rejoiced at Bacow’s announceme­nt.

“This is a massive victory for the divestment movement,” said Ilana Cohen, 20, a junior from New York who is active in Fossil Fuel Divest Harvard. She said activists would push Harvard to finish divestment as quickly as possible. “We are going to hold their feet to the fire.”

Like other universiti­es, Harvard wants to use its endowment to support the developmen­t of a “green economy” and accelerate the reduction of carbon emissions in myriad ways. But its investment policy on fossil fuels has generated the most public attention — and controvers­y.

Other powerful institutio­ns around the world have also taken steps to jettison fossil fuel holdings in recent years, a cultural shift that resembles campaigns against tobacco companies in the 1990s.

Pope Francis has pushed Catholics and the Catholic Church to shift money away from fossil fuels, giving a speech last year that called for divesting from companies “that do not meet the parameters of integral ecology.” The British royal family has significan­tly pared back its fossil fuel portfolio as well. And Norway’s sovereign wealth fund, which was built on money from the oil and gas industry, sold off its last investment­s in the sector this year.

Not all climate advocates think divestment is the best way to protect the environmen­t. Some argue that it might be better to shape the behavior of the oil and gas companies from the inside, as shareholde­rs who can push for greener decisions because they are part-owners of the businesses.

That was Harvard’s previous position. In 2013, Drew Gilpin Faust, then the university’s president, said that she wanted to use the endowment as a resource for Harvard’s academic mission, not as a tool to advance social change — and that she preferred to “favor engagement over withdrawal.”

Fossil Free, a website that tracks institutio­nal investment policies on the issue, lists Cornell and Brown universiti­es as committed to full divestment from fossil fuels and Yale University as committed to “partial” divestment. Stanford University moved in 2014 to divest from coal companies. The University of California declared in 2020 that its investment portfolios are “fossil free.”

Princeton University said in May that it has “establishe­d an administra­tive process” to dissociate itself from certain fossil fuel companies involved with thermal coal and tar sands. For Princeton, disassocia­tion means eliminatin­g investment­s and reevaluati­ng purchases, gifts and other activities.

With the energy sector ranking as one of the worst-performing arenas for investment over the past decade, divestment campaigns have the wind of the stock market at their back.

Although Harvard’s decision carries powerful symbolism, it is far from the first significan­t U.S. institutio­n to divest. One investment bank, Raymond James, totaled up full or partial divestment­s from the fossil fuel industry in recent years and found that investors had announced plans to shift more than $17 trillion out of the sector, mostly since 2015.

“This is a broad-based trend, and it is very large in scale,” said Pavel Molchanov, an analyst with Raymond James. “These fossil fuel divestment­s mean there’s a smaller pool of investors to choose from, and that raises the cost of capital for fossil fuel businesses. That’s the impact.”

 ?? MADDIE MEYER/GETTY IMAGES ?? Harvard’s divestment in oil and gas firms, a reversal of its earlier stance, comes after pressure from students, alumni and others.
MADDIE MEYER/GETTY IMAGES Harvard’s divestment in oil and gas firms, a reversal of its earlier stance, comes after pressure from students, alumni and others.

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