Harvard says “thanks but no thanks” to fossil fuel divestment

posted at 4:01 pm on October 5, 2013 by Jazz Shaw

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.


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One thing I’ll say for Harvard, investments trump politics.Their portfolio managers would buy Tea Party stock if they thought it was a winner.

MaiDee on October 5, 2013 at 4:10 PM

Heh. Faustian Bargain.

faraway on October 5, 2013 at 4:13 PM

My letter to these activists:

Dear Eco-fascists:

Bugger off.

/rbj

rbj on October 5, 2013 at 4:15 PM

I think oil companies should divest themselves of Harvard, actually.

JSchuler on October 5, 2013 at 4:16 PM

If Harvard finds them so offensive, they should simply refund their money and send them on their way.

…including Administration officials!

KOOLAID2 on October 5, 2013 at 4:17 PM

Well, why should they now that the IPCC is in full retreat on its past claims?
The Science Is Settled and Nothing Much Of Note Is Going To Happen in the next century.

ajacksonian on October 5, 2013 at 4:21 PM

Well, yeah. Harvard’s actual economic advisers are much more intelligent, cognizant, and well-read than Harvard’s Department of Economics.

HitNRun on October 5, 2013 at 4:25 PM

This really isn’t much different than a headline as “Harvard says ‘thanks but no thanks’ to food company divestment.”

The climate change loons could say that food causes humans to persist, and humans cause CO2 and climate change, so we should divest from the evil companies that produce food.

And they should practice what they preach: stop eating! Same with gas and oil, it is the lifeblood of humanity. Without fosil fuels, society would enter an apocalyptic crumble. Why don’t these doomsayers practice what they preach? Stop using anything produced or driven by fossil fuels, which includes most of our food!

Oh, and by the way, about climate change, as The Economist puts it: “The mismatch between rising greenhouse-gas emissions and not-rising temperatures [15 year temperature stall] is among the biggest puzzles in climate science just now.” And it turns out, though the MSM never talks about this, the only evidence on CO2 is that temperature affects CO2 levels, but there is no actual evidence (only a debatable theoretical model) that CO2 affects climate temperature; to see what I mean, see this key 3 minute video that exposes Al Gore’s bs on CO2: http://www.youtube.com/watch?v=WK_WyvfcJyg&CO2LAG

anotherJoe on October 5, 2013 at 4:30 PM

Heh they’re smarter than I thought. I doubt they were stupid enough to admit partisan.

CWchangedhisNicagain on October 5, 2013 at 4:32 PM

They may be radical or idiotic… but they’re not stupid.

Harvard has set its sites on raising a record $6.5 billion by 2018. (Gotta beat Stanford and USC, you know.) Guess how many donor alums (especially B-School grads) work for Big Oil? Guess how many Big Oil companies fund research at Harvard?

In petroleum veritas.

de rigueur on October 5, 2013 at 4:33 PM

The letter goes on at length from there, and I welcome you to try reading the entire thing without snickering if you dare

I snickered early on:

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.

So climate change takes a backseat to the advancement of their academic goals?

Surprise.

VibrioCocci on October 5, 2013 at 4:34 PM

Unsurprisingly, given their anti-scientific skepticism of bedrock economic forces, liberals have a totally fantastic concept of the boycott (or the “divestment,” or whatever).

A boycott’s possibility of working – which is not to say it will work – is in inverse proportion to the separability of the target from its alternatives.

Which is to say, boycotts don’t work against commodities. Ever. A gallon of gas is a gallon of gas, and if we all refuse to buy it, someone else will.

Incidentally, if these people want to divest from fossil fuels, their car is right there on the curb. Scrap it or, if you can’t afford such a sacrifice for Our Earth, sell it.

Boom, no more fossil fuels. Heck, undoubtedly some of them can afford electric cars. I won’t even

HitNRun on October 5, 2013 at 4:36 PM

They may be radical… or idiotic… but they’re not stupid.

Harvard has just announced that it intends to raise a record-breaking $6.5 billion (BILLION) by 2018. (Gotta beat Stanford and USC, you know.) Guess how many Harvard alums (especially B-School grads) work for Big Oil? Guess how many Big Oil companies fund research at Harvard? (Example: In 207, Harvard’s Kennedy School of Government was the recipient of a five-year $3,750,000 donation from the Shell Exploration & Production Company.)

In petroleum veritas, guys. In petroleum veritas.

de rigueur on October 5, 2013 at 4:45 PM

Nobrain, hardest hit. /

Resist We Much on October 5, 2013 at 4:50 PM

Here’s how it works.
http://www.youtube.com/watch?v=V_4ocoJDVD8

docflash on October 5, 2013 at 4:51 PM

ot/…gg !…you watching the little brown jug battle?…gophers look good!

KOOLAID2 on October 5, 2013 at 4:56 PM

Limousine liberal. Just like Hollywood in their expensive cars and airplanes. It’s all good for the common people but when it comes to brass tacks it’s just not a good idea. Rot in hell all of you limousine liberals

jaywemm on October 5, 2013 at 4:58 PM

you left out the best paragraph

I also find a troubling inconsistency in the notion that, as an investor, we should boycott a whole class of companies at the same time that, as individuals and as a community, we are extensively relying on those companies’ products and services for so much of what we do 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.

someone on the left actually using “we shouldn’t be hypocrites” as a defense against taking action. that is a first. if they rest of the global warming crowd followed that example it would collapse.

chasdal on October 5, 2013 at 4:59 PM

Another thing to note is that Harvard will not be attending shareholder meetings and protesting the oil companies’ activities either.

Charleton Heston owned shares of Time/Life, whom he didn’t agree with much, but the year “Cop Killer” was a huge hit and T/L owned the record company that produced it, Heston rose with a question for the Board. “Gentlemen, I wonder if the lyrics of this song represent the values of T/L…” and then he proceeded to read the lyrics and included every “F” word in all it’s glory.

When he finished you could hear a pin drop. The CEO made some lame excuse relating to the First Amendment and moved on. Three months later they sold off the rap record business.

mbecker908 on October 5, 2013 at 5:02 PM

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.

Too much irony to handle! The Steven Hayward quote is good—Leftist not interested in putting their money where their mouth is!

INC on October 5, 2013 at 5:05 PM

In petroleum veritas, guys. In petroleum veritas.

de rigueur on October 5, 2013 at 4:45 PM

ROFL!

INC on October 5, 2013 at 5:06 PM

Hypocrites.

22044 on October 5, 2013 at 5:09 PM

I’ve never been a great fan of DGF, but am pleasantly unsurprised in this instance.

steebo77 on October 5, 2013 at 5:13 PM

Nobrain, hardest hit. /

Resist We Much on October 5, 2013 at 4:50 PM

…probably lost more foreskin!

KOOLAID2 on October 5, 2013 at 5:19 PM

At one time it made sense to subsidize higher education. After WWII, we had millions of men coming out of the services, many of whom had been snatched from their lives to defend their country for less than $100 a month. Some federal benefits to help them restart their lives was fully appropriate, such as the GI Bill and VA housing loans. But that was a narrow purpose.

Why are we subsidizing institutions which not only sit on hefty endowments but also react to every single subsidy intended to lower the costs of education by raising their tuitions and fees? It is senseless.

Not that federal subsidies for K-12 education have yielded any return on investment, either, but that is the area that clearly needs help (although not the sort the feds can give).

We just need the government to phase out of the education business altogether and stick to what it does best: transfer payments from the productive to parasites.

Adjoran on October 5, 2013 at 5:32 PM

Charleton Heston owned shares of Time/Life, whom he didn’t agree with much, but the year “Cop Killer” was a huge hit and T/L owned the record company that produced it, Heston rose with a question for the Board. “Gentlemen, I wonder if the lyrics of this song represent the values of T/L…” and then he proceeded to read the lyrics and included every “F” word in all it’s glory.

When he finished you could hear a pin drop. The CEO made some lame excuse relating to the First Amendment and moved on. Three months later they sold off the rap record business.

mbecker908 on October 5, 2013 at 5:02 PM

Holy Crap, I miss that guy!

Mitoch55 on October 5, 2013 at 6:55 PM

From the king spawner of political hypocrites, they understand the difference between idealogy & debt.

RdLake on October 5, 2013 at 8:37 PM

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.

So climate change takes a backseat to the advancement of their academic goals?

Surprise.

VibrioCocci on October 5, 2013 at 4:34 PM

No, everything takes a back seat when their dollars are at risk.

“Why do we own stocks in Big Oil? Because, shut up”

BobMbx on October 5, 2013 at 8:53 PM

Of course, the fiscal policies the Harvard faculty support are going to eat away at that endowment when inflation takes off.

mankai on October 5, 2013 at 11:39 PM

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.

This is a problem of capitalism that you can’t exclude from the wealth the people who think that they don’t like the system that created the wealth.

thuja on October 6, 2013 at 10:59 PM