CREDIT: Josh Reynolds / Boston Globe
Harvard President Drew Faust released a letter yesterday explaining why the university will not be divesting from fossil fuels.
Harvard’s $30.7 billion endowment — the largest of any in the nation — has become a flashpoint in the fight over climate change, due to its investments in the companies that contribute to greenhouse gas emissions. Climate activist Bill McKibben has made dropping those investments a focal point of his 350.org campaign, and a university referendum in November 2012 found 72 percent in favor of divestment. So Harvard is feeling the heat from its own student body.
Faust gives four reasons for the decision of the school’s governing board, which range from weak to wrong to self-contradictory:
Divesting would hurt Harvard’s bottom line. According to Faust, the endowment provides over a third of the University’s funds. And a hit to those funds would indeed threaten the other environmental work Harvard does. But Faust says nothing of the potential upsides to divestment, and cites no evidence for her position other than “logic and experience.” The research firm S&P Capital IQ actually ran the numbers on the S&P 500, and found an endowment that excluded the targeted fossil fuel companies would’ve grown more over the last ten years. Certainly there are risks. But there are also potential upsides, and the evidence seems to weigh heavily for the latter.
Fossil fuel companies wouldn’t notice. “Universities own a very small fraction of the market capitalization of fossil fuel companies,” Faust argues, pointing out that any shares they dropped would be rapidly snatched up by other investors. This is almost certainly true. But that same lack of market clout undermines Faust’s next point, that divestment “would diminish the influence or voice we might have with this industry.” It also ignores the political and cultural value Harvard’s divestment would have as a symbolic act, not to mention the basic moral point: Harvard should not benefit from economic activities that harm the global ecology and threaten the global poor.
The endowment is not an instrument to impel social or political change. That wasn’t what the benefactors who originally provided the endowment intended, writes Faust. And using it as such comes with dangers: “Conceiving of the endowment not as an economic resource,” Faust writes, “but as a tool to inject the University into the political process or as a lever to exert economic pressure for social purposes, can entail serious risks to the independence of the academic enterprise.” But whether Faust likes it or not, climate change is already a politicized issue. By praising Harvard’s environmental and sustainability work, and by calling climate change “one of the world’s most consequential challenges,” Faust herself has already effectively “instrumentalized” the institution in that fight.
Divestment is hypocritical. “Given our pervasive dependence on these companies” in our personal consumption, Faust says, “it is hard for me to reconcile that reliance with a refusal to countenance any relationship with these companies through our investments.” Certainly many of Harvard’s students and faculty are profoundly economically privileged, and thus have the leeway to divest personally in the same way they’re asking Harvard to. But some are not. Certainly the vast majority of Americans are not. Fighting fossil fuel use is ultimately a matter of systemic social and economic change, not personal virtue. Faust would do well to remember the old saw that “hypocrisy is the tribute vice pays to virtue.”
Faust’s letter certainly isn’t unreasonable, and certainly doesn’t dabble in climate denialism. But it’s weak sauce compared to the waves Harvard University would make if it decided it just couldn’t take the money from fossil fuels in good conscience.