There has been a movement afoot for some time now to have the nation’s richest and most storied universities put their money where their mouths are (or, more accurately, to take their money away) and divest their endowments from any involvement in the dirty, nasty field of “fossil fuels.” Makes sense, right? I mean, Big Oil, evil corporate empires, polluters and destroyers of worlds and all that.. natch. They wouldn’t want to be seen sullying their pristine hands with money derived from economic activity surrounding oil, coal or natural gas. But as it turns out, the endowments of some of the biggest and most successful universities are well invested in the profits of the energy giants.
This includes Harvard, which was recently confronted by demands from activists that they get themselves out of this tawdry business at once. After due consideration, the President of Harvard, one Drew Gilpin Faust (no… seriously. That’s her actual name. I checked three times) issued a response.
Dear Members of the Harvard Community,
Climate change represents one of the world’s most consequential challenges. I very much respect the concern and commitment shown by the many members of our community who are working to confront this problem. I, as well as members of our Corporation Committee on Shareholder Responsibility, have benefited from a number of conversations in recent months with students who advocate divestment from fossil fuel companies. 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.
Harvard is an academic institution. It exists to serve an academic mission — to carry out the best possible programs of education and research. We hold our endowment funds in trust to advance that mission, which is the University’s distinctive way of serving society. The funds in the endowment have been given to us by generous benefactors over many years to advance academic aims, not to serve other purposes, however worthy. As such, we maintain a strong presumption against divesting investment assets for reasons unrelated to the endowment’s financial strength and its ability to advance our academic goals.
The letter goes on at length from there, and I welcome you to try reading the entire thing without snickering if you dare. She essentially bends over backward to say that yes, oil is bad and the energy companies are evil and destroying the world, and certainly something must be done. But hey… this is a lot of money we’re talking about here. You can’t just go leaving that much meat on the plate and stay in business. And wouldn’t we do better to keep profiting off of them so we can “educate” the next generation of warriors to talk about how evil they are?
And just how much money are we talking about? The precise level to which Harvard’s endowment is invested in Big Oil isn’t immediately evident, but according this report, as of 2012, they dwarfed every other university by a long shot. In fact, their endowment in 2012 was listed at $30 billion. I wonder how all of the alumni out there react the next time they get a letter asking for more donations when they read something like that? And no… that wasn’t a typo. Harvard is sitting on thirty billion dollars. With a “B”.
The New York times rushed out their own eco-warrior expert, Andrew Revkin, to explain why Harvard’s decision really wasn’t all that bad, right?
Financial assets are to a significant extent underpinned by what some call “natural capital” — the productivity of soils and seas, the value of clean water, the benefits of a livable climate.
Activism and challenges to the status quo are important, but I think the best odds of progress come if some young people also choose to work within the corporate system and become the next generation of trustees, not just of their universities, but also of humanity’s broader set of assets.
Steven Hayward is able to find the humor in it.
I wonder if Faust is tiring of Harvard’s presidency, and phoned Larry Summers for advice on how to get fired. I’ll add that I’ve often said that if the climate divesters were serious, they’d be calling on their campuses to eschew all forms of fossil fuel energy on their campuses, and replaced them 100 percent with “renewables.” And watch their tuition skyrocket even more. This suggestion is met with silent glares or a change of subject. Heh.
The somewhat sad part of this story is that the President of Harvard is actually correct, while defending her decision with all the wrong reasons. Part of their job is to operate the university as a business, and they have bills to pay so they need to take care of their funds. Energy is a great investment, as it has been for generations. But delivering this answer with a clothespin on her nose, insulting the industry while taking their dividend checks, is pretty offensive. It’s kind of a shame that companies can’t simply single out investors to cut off from the tap in some quick, easy process. If Harvard finds them so offensive, they should simply refund their money and send them on their way.