Education

Harvard refuses to divest of fossil fuels

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Michael Bastasch Energy Editor
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Harvard University is refusing the bow to pressure from environmentalists to sell off its investments in fossil fuel companies, according to the school’s president.

The school decided it wanted to keep its fossil fuels investments, a move that was met with scorn from environmental activists who are pushing for educational institutions to go green with their endowments.

“I do not believe, nor do my colleagues on the [school’s board], that university divestment from the fossil fuel industry is warranted or wise,” President David Faust said a letter. “The endowment is a resource, not an instrument to impel social or political change.”

“We should also be clear-sighted about the risks that divestment could pose to the endowment’s capacity to propel our important research and teaching mission,” Faust wrote. “Significantly constraining investment options risks significantly constraining investment returns. The endowment provides more than one-third of the funds we expend on University activities each year.”

Faust added that universities own a small portion of fossil fuel investments, so dumping them would not harm the fossil fuel industry.

“[S]uch a strategy would diminish the influence or voice we might have with this industry. Divestment pits concerned citizens and institutions against companies that have enormous capacity and responsibility to promote progress toward a more sustainable future,” Faust added.

However, Faust’s remarks were denounced by environmentalists who argued that not only would Harvard be better off financially by divesting of fossil fuels, but that the school would be doing the right thing.

“Well, not unexpected,” said Bill McKibben, a Harvard graduate and founder of the activist group 350.org, which helped fuel the divestment campaign. “It took Harvard five years to figure out it didn’t want to be involved with apartheid in South Africa; one hopes that the efforts of students, faculty, and alumni mean this will happen more quickly.”

McKibben and the activists at 350.org claim that students at more than 300 schools are pressuring educational institutions to divest themselves from fossil fuels — which they argue drive global warming.

Most schools have opted not to sell off lucrative fossil fuel investments which support many endowments and scholarships. Some smaller schools like Unity College in Maine and Hampshire College in Massachusetts have supported the campaign.

350.org points to an Associated Press article which found that “[a]n endowment of $1 billion that excluded fossil fuel companies would have grown to $2.26 billion over the past 10 years, but an endowment that included investments in fossil fuel companies would have grown to $2.14 billion.”

However, a study by Senecon found that while oil and natural gas stocks made up only 2.1 percent of university endowments, those investments generated 5.7 percent of all endowment gains in between 2010 and 2011.

The study also found that oil and natural gas stocks showed 53 percent returns — outperforming endowments as a whole as well as the performance of the S&P 500.

“The Sonecon study on college and university ownership of oil and natural gas company stock found that for more than a decade America’s colleges and universities have enjoyed strong returns from their investments in America’s oil and natural gas companies,” John Felmy, chief economist at the American Petroleum Institute.

“Indeed, university and college investments in oil and gas firms outperformed the endowments as a whole and outperformed every other asset class examined in their endowments,” Felmy added.

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