Forgive the indelicate play on words, but Harvard University has emitted a dense smokescreen as its latest response to the climate crisis.
In the guise of a new pledge to create an endowment that is carbon neutral within 30 years, the university, whose portfolio officially stands at more than $40 billion, again rejected divestment from fossil fuels. It did so in the face of a resounding faculty vote that championed divestment as a moral imperative.
On its face, a pledge to transform the endowment to “net-zero greenhouse gas emissions” by 2050 sounds positive. A number of pension funds have already made such a commitment, and as Harvard’s pledge notes, the net-zero goal is consistent with the aims of the UN-sponsored Paris Agreement.
In proper context, however, the pledge can more readily be viewed as a classic diversion and distraction from the divestment debate. Here is only some of that context:
- Harvard declares that its net-zero pledge “transcends the binary divestment debate.” In effect, it flatly rejects divestment, once again. This is the true headline from its four-page statement issued April 21, 2020.
- Harvard’s alumni will vote this summer on whether to install on the university’s Board of Overseers a slate of dissident alumni who favor fossil fuel divestment. There is little doubt that the university’s net-zero commitment was aimed in part at blunting the work of Harvard Forward, the alumni group organizing the divestment campaign.
- Harvard says it will focus not only on energy supply but energy demand, yet it makes no commitment to invest in alternative energy systems, as some of its peers have. In Harvard’s view, the way to halt climate change isn’t to pull money out of the further extraction of oil and gas and shift it immediately to alternatives, but rather to take 30 years to persuade companies to do better on carbon.
- Harvard’s pledge is framed as a commitment to follow United Nations guidance on climate science and the voluntary Paris accord. It proudly wears the UN seal of approval. Yet the UN’s approach has, by its own admission, delivered not just weak results but negative results. According to last year’s UN Emissions Gap Report, global greenhouse gas emissions need to be cut 7.6% a year for the next decade to reach the Paris goal but in fact global emissions are rising. We don’t have 30 years.
- Harvard pledges to support the work of an investment industry body called the Task Force on Climate-related Financial Disclosure (TCFD). Its goal is to help investors understand the costs and risks embedded in corporate policies and actions on carbon by urging companies to volunteer more transparency. In reality, TCFD is one of many cogs in the marketing machine for “ESG,” the investment industry’s “social responsibility” gambit, which serves as an excuse for inaction on climate change (this essay explains). The task force is chaired by Michael Bloomberg, whose namesake financial data behemoth profits by selling ESG risk data to Wall Street.
- By linking its pledge to a complex, long-term process of understanding the carbon risks within companies whose shares it might hold, Harvard seems to be saying it does not yet understand the environmental costs that companies like Exxon Mobil are creating.
- Havard’s pledge places great stock in the work of the UN’s Intergovernmental Panel on Climate Change (IPCC), whose chair, a climate scientist, was ousted during the Bush presidency after lobbying by Exxon. The current chair formerly worked as an economist at Exxon. Its work may be excellent, but the IPCC is not foundational to Harvard’s avowed need for reliable information. Relying on its own highly paid faculty might be cheaper and quicker.
- As written, the pledge is bursting with caveats, even going so far as to state that Harvard “cannot achieve” its goal unless governments meet their Paris commitments and unless important scientific advances and changes in consumer behavior are secured. It is as if Harvard expects to float toward its net-zero goal on a tide that can only be created by others.
- Harvard takes pains to explain how complicated and time consuming it will be to look through to the holdings of its many external money managers to calculate aggregate emissions. It pledges to provide annual reports on its progress over the next three decades. Somehow, Brown University managed to rid its endowment of 90% of its fossil fuel-extraction holdings in under two years and continues toward the goal of 100% divestment.
Most importantly, Harvard has chosen to ignore the call of its own faculty to take a moral stand on climate change and to be an urgent voice for climate justice. It prefers to engage in a highly bureaucratic, multi-decade effort to dig into the holdings of the hedge funds and private equity funds it hires, then persuade those managers to trim their portfolios’ carbon footprint. Or perhaps it intends to compensate for sustained emissions by pulling enough carbon out of the air once the technology has been perfected.
This is a run-out-the-clock strategy. It is not leadership, despite Harvard’s self-congratulatory assertion that its “net-zero” pledge is a “first among higher education endowments.” It is only a first because so many other endowments have simply assessed the risks of fossil fuel holdings and determined that the time to sell is now (or several months ago).
Harvard is resisting divestment for many reasons. One of the most important is that it fears that social activists will demand divestment for scores of other causes, knowing that the Harvard name alone makes a good headline and delivers publicity. Harvard says it sees the endowment as an “economic resource, not as a lever to advance political positions.”
There are exceptions. It’s own sustainability policy states that “very rare occasions may arise when companies’ activities are so deeply repugnant and ethically unjustifiable as to warrant the University’s institutional dissociation from those activities.” These have included apartheid, tobacco-product manufacturing, and genocide in Darfur.
Harvard’s endowment chief, Narv Narvekar, is a smart and capable investor. He could spare the university the enormous expense of a decades-long effort at data gathering, analysis, and engagement with outside money managers. The hedge funds that take capital from Harvard would instantly get the message if Mr. Narvekar fired just one because of its energy holdings. It would take a one-page letter.
Instead, Harvard counts the continued global extraction of fossil fuels, whose use is known to cause climate change, as ethically justifiable. It’s a choice, one that might weaken or enhance the endowment’s returns — or weaken or enhance Harvard’s stature. We now know where the university stands. I will be voting for the dissident slate of Overseers and urge my fellow Harvard alumni to do the same. We don’t have three decades to play with. We are simply out of time.