Harvard’s endowment will become greenhouse-gas (GHG) neutral by 2050, University president Lawrence Bacow announced in an email to the Faculty of Arts and Sciences (FAS) today, one day before the fiftieth anniversary of Earth Day.
“With this commitment, our focus is on reducing the demand for fossil fuels, an action that is consistent with the University’s overall commitment to reduce our operational carbon footprint,” Bacow said in a news release. “It will require us to work with other investors to develop tools to monitor the carbon footprint of our investment managers. If we are successful, we will reduce the carbon footprint of our entire investment portfolio and achieve net-zero greenhouse gas emissions.”
This commitment is not the same as fossil-fuel divestment; instead, “carbon neutrality” means reaching a “net zero” carbon footprint through a combination of reducing emissions and offsetting carbon-dioxide emissions with investment in technologies that remove carbon from the atmosphere. The timeline aims to be consistent with the Paris Agreement’s call to eliminate global carbon emissions by 2050.
The announcement comes after months of intensified activism—although relatively more muted since the COVID-19 University shutdown—from student and faculty advocates of fossil-fuel divestment at Harvard and other universities, and from a slate of candidates for election to the Board of Overseers. In February, the Faculty of Arts and Sciences voted 179-20 in favor of divesting the University endowment from fossil fuels. Last year, student group Divest Harvard called on the University to divest from fossil fuels by Earth Day 2020. Oxford University recently passed a motion requiring its endowment to divest from direct investments in fossil fuels, The Oxford Student reported yesterday. U.S. universities such as Georgetown and Brown have pledged to divest from fossil fuels. Harvard’s announcement today is the first university commitment of its kind.
During the faculty debate last December, Olshan professor of economics John Y. Campbell urged what he saw as a broader perspective than divestment, advocating instead an investment strategy that would focus on reducing demand for greenhouse-gas-emitting sources of energy; obviously, today’s announcement addresses the endowment’s assets as a whole.
In a statement, Divest Harvard called the move “a step in the right direction” and said that “Harvard has finally acknowledged that its investment strategy must play a role in mitigating the climate crisis...However,” it continued, “today’s announcement falls far short of divestment and is insufficient for three primary reasons. First, not only does it permit continued investments in the fossil fuel industry, but it clings to the hope that these companies will suddenly become cooperative partners in the energy transition. It’s nonsensical to discuss decarbonization while maintaining investments in fossil fuels. Second, it leaves the university a wide margin to calculate portfolio emissions however it chooses. Until we know how these calculations will be done, we cannot even be sure if this announcement constitutes a meaningful change in investment strategy. Finally, its timeline is far too protracted. Scientists have made it clear that 2050 is much too late a horizon for the energy transition.”
Harvard Faculty for Divestment similarly called the commitment “a significant step [that] will be see as a path for others to follow” and praised the Harvard Corporation's willingness to evolve on this issue, but argued that it does not go far enough. "[T]he pace is too slow," the group said in a letter to Bacow. "The goal of a carbon-neutral portfolio by 2050 is simply not ambitious enough...We are disappointed in your argument against divestment, which simply repeats arguments that have been made for years," they continued. "It is incongruous, if not counterproductive, to pursue a decarbonized portfolio while continuing to invest in the very companies that supply the carbon and, moreover, that continue to do far more to perpetuate that supply—and the demand for it—than they do to reduce it."
The next step will be for the Harvard Management Company to work with Harvard faculty and other experts to figure out a methodology for calculating greenhouse-gas emissions and working with investment-fund managers to determine the GHG impact of Harvard’s holdings. HMC will report progress toward the commitment annually and develop interim goals toward meeting the 2050 goal.
Harvard has also become a supporter of the Task Force on Climate-Related Financial Disclosures, which “serves as an intermediary between investors and corporations to make sure appropriate data is available for thorough climate impact assessments.” It aims to establish standards for corporations to voluntarily disclose climate-change-related financial risks to investors, insurers, and other stakeholders.
“It’s always difficult to gather comprehensive data for the first time—especially on this scale—but we will take every opportunity to refine and improve our analysis as we work toward a net-zero portfolio,” said HMC CEO N.P. Narvekar in a statement.
“We appreciate that advocates for divestment from fossil fuel companies may not be satisfied with this approach, but we believe that divestment paints with too broad a brush,” Bacow wrote. “We cannot risk alienating and demonizing possible partners, some of which have committed to transitioning to carbon neutrality and to funding research on alternative fuels and on strategies to decarbonize the economy. If we are to develop a productive path forward, we and others will need to work with these companies, recognizing our dependence on their products for the foreseeable future, the nature of the assets under their control, and the special knowledge and expertise they possess.”
“Continuing to invest in the fossil fuel industry is locking us into a future that we cannot afford,” Divest Harvard's statement concluded. “By evading divestment, Harvard is once again standing with fossil fuel companies and against its students’ futures. We will continue to call on Harvard to disclose, divest, and reinvest, and finally separate itself from the industry destroying our futures.”
