December 12, 2018

With a new president inaugurated, one long trained in environmental matters, and with more than five years lapsed since the stated policy of the Harvard Corporation to continue business as usual in fossil fuel investments, the Corporation now has the opportunity to readjust that position, coming closer to, say, Stanford, which has publicly rejected coal, or Yale, which has set criteria for fossil fuel investments. Hundreds of mainstream educational, health, religious, and governmental organizations worldwide have divested in various forms, especially from coal, tar sands, exploration, and new fossil-fuel infrastructure. They have taken a moral stance. They are not suffering economically for it.

In December 2018, the Global Carbon Project, a highly respected group of scientists who comprehensively monitor worldwide emissions, stated that global greenhouse emissions—despite more than two decades of urging a transition to carbon-neutral sources—are now at a record high and have been increasing. The window of opportunity to avert severe, long-term consequences (of centuries, even millennia) for human health, human rights, biodiversity, and global prosperity is shrinking rapidly.

In the five years since the Corporation, on October 3, 2013, stated its intention to continue investing in fossil fuels, we have come 25% of the way to 2033. Are we to invest in fossil fuels from now until 2033 when, on October 8, 2018, the IPCC issued unusually dire warnings to reduce total emissions greatly by 2030, starting now? The Fourth US National Climate Assessment of a few weeks ago, supported by thirteen federal agencies, reinforces this urgency.

Senior Fellow of the Corporation William Lee has stated that divestment is out of the question in part because fossil fuels are so enmeshed with society. Yes, perpetuated through political capture, political contributions, and decades of climate denial. That industry doesn’t want to pay compensation for harm done and being done. One member of the Harvard Corporation, Ted Wells, Jr., is a leading attorney for ExxonMobil in facing lawsuits (not from crackpot individuals but from municipal, county, and state governments) about consequences of climate change, change that his client had denied and publicly undermined, even when its own corporate scientists knew, decades ago, what was happening. Has Mr. Wells recused himself from any Harvard Corporation discussions regarding climate issues and investment in fossil fuels?

Representatives of the Corporation have stated that the endowment should not be used as an instrument of social change, that it should not be leveraged to promote controversial social policies. Under any circumstances at all normal we would agree. But these are far from normal circumstances. However controversial in some quarters, ending the use of fossil fuels and their greenhouse gas emissions is not merely the only prudent response to the extraordinary challenge of global climate disruption, it is, in fact, an absolute necessity. And it needs to be done as soon as possible. In this case, purity of principle in focusing solely on financial returns must give way to a higher, existential principle, as well as to the impact that divestment will have on the public debate.

On the day of the 2013 statement, Drew Faust stated to one of our signatories that the Corporation would take no investment stance that was “political.” President Trump in October 2018 indeed accused climate scientists of a “political agenda.” Does the Harvard Corporation believe President Trump?

Climate disruption is degrading human health globally. Just ask Gina McCarthy at the Harvard T. H. Chan School of Public Health, or Jennifer Leaning, or any informed physician anywhere. Climate disruption hits the health, welfare, and the human rights of the world’s poor, the disadvantaged, and people of color much harder than it does first-world white folks. Skeptical? Just ask Mary Robinson, to whom Harvard gave an honorary degree and on whom the Kennedy School bestowed honors. She heads a foundation, Climate Justice, dedicated to climate change and human rights.

In late 2013 it may have been plausible to believe that it would take time to educate members of the Corporation about climate issues. Fair enough. That would have indicated that the 2013 policy of the University regarding investments in fossil fuels might at some future time alter. After all, faculty never demanded immediate divestment (a point often overlooked), only a policy of being open to divestment as soon as possible.

More than five years have passed, more than enough time for a transformative Harvard College liberal education, but has it been enough time to educate the Corporation about equally “transformative” climate change, its direct link to fossil fuels, and to the money invested in them? Yes, follow the money.

In case that education needs bolstering, here, courtesy of Ben Franta of Stanford, are salient reports and observations:

  • To meet the Paris 2 degree C goal, the need to reduce investments in fossil fuels—starting yesterday, let alone right now—has the backing of scientific and data-driven groups. If Harvard, as an emitter, is reducing greenhouse gas emissions, which it admirably is, then, as an investor, Harvard should reduce fossil fuel investments.
  • For Harvard to claim no responsibility for reducing such investments runs parallels to any claim that it has no responsibility to reduce its own greenhouse gas emissions—but that everyone else does. All institutions should do their part on both emissions and investments. It’s no more “hypocritical” to reduce fossil fuel investments than it is to reduce institutional greenhouse gas emissions. The two go hand in hand.
  • In its 2012 World Energy Outlook, the International Energy Agency (IEA) estimated that greenhouse gas emissions corresponding to a global temperature rise of 2 degrees C would be locked into built energy infrastructure by 2017. In order to meet the Paris 2 degree C goal, new fossil-fueled power plants should not be built unless they have carbon capture and storage technology, which is not widely available, despite earlier, rosy predictions.
  • The 2013 World Energy Outlook Special Report of the IEA estimated that to meet a 2 degree C goal, investments in fossil fuel supply would need to decline by $5 trillion through 2035, approximately $200 billion per year.
  • The 2014 IPCC assessment report (AR5) estimated that to stabilize greenhouse gas concentrations to meet a 2 degree C goal, investments in fossil fuel extraction would need to decline about $100 billion per year between 2010 and 2029.
  • A 2016 report by Oil Change International concluded that meeting the Paris 2 degree goal implies that no new fossil fuel extraction or transport infrastructure should be built worldwide.

These studies point to climate-related responsibilities for investors concerning fossil fuel exploration, extraction, infrastructure, and, political lobbying. Is the Harvard Corporation Committee on Shareholder Responsibility (and its hand-picked faculty advisory committee) listening? So far, its actions in this area have ranged from pabulum to milquetoast. Engagement with companies has produced no results whatsoever commensurate with the magnitude of the issue. Compared with the action needed, subscribing to protocols such as PRI proves radically ineffective.

It has become clear that only bogus reports or reports funded directly or indirectly by the fossil fuel industry are claiming that fossil fuel divestment will hurt financially. Are we still worried that any form of divestment will mean lower returns? Jeremy Grantham of the Grantham Institute for the Protection of the Environment at the London School of Economics calls this the “mythical peril of divesting from fossil fuels.”

Countless disinterested market analyses reveal that for many years, even decades, divesting from fossil fuels does no damage financially.

So, in the end, ironically, this is indeed about politics. Harvard has taken a political position in the guise of being not political. The Corporation apparently does not want to offend certain constituencies or be subject to more pressure from others seeking other agendas. One of its own members defends ExxonMobil—on precisely climate related issues. Harvard is willing to invest in industries whose long-term effect is indisputably detrimental to the poorest and most vulnerable. It seems willing to turn a blind eye to connections between this issue and human rights. Most shockingly, it seems impervious to the fact—a hard, unique fact—that these investments, unlike any others in human history, have global consequences for centuries, perhaps millennia.

Three times in the last forty years Harvard has divested, from certain companies doing business in South Africa, from tobacco, from Sinopec. Divestment is far from unprecedented.

The Corporation has refused to discuss or debate divestment publicly, even to talk about it in open University meetings with faculty—only in private sessions. Yet, President Bacow is quoted in an October 2018 interview saying, “The challenge arises when we have contentious issues and people want us—either the University or a School or a dean or a president—to take a stand, and the problem is where reasonable people can differ on certain issues, I believe it’s the function of a university to encourage debate.” He added pointedly, “If we take a position, we’re not encouraging debate, we are ending it.”

The Corporation did take a position on fossil fuel divestment in 2013 and seemingly assumed that the debate—in which its fiduciaries never engaged openly with the community, but only in written statements and closed-door meetings—would end. The Corporation since that time has continued to refuse to discuss it in the open. However, divestment regarding South Africa was openly and repeatedly debated, including in faculty meetings and in public forums in the 1980s, much to the credit of Derek Bok and the University as a whole. It is time for the Corporation to reconsider its 2013 statement that perpetuates business as usual in fossil fuel investment. It is time for open debate within the University and with its fiduciaries.