Rachel Koning Beals
Harvard University, whose $42 billion endowment is the largest of any U.S. higher-learning institution, has cut its investments in fossil fuels.
President Lawrence Bacow said the endowment had no direct investments in fossil fuel /zigman2/quotes/209723049/delayed CL00 +1.23% /zigman2/quotes/210189548/delayed NG00 +0.69% exploration or development companies as of June and it will not take stakes in these businesses moving forward.
The divestiture, long called for by some students and alumni, as well as activists, stems from “… the need to decarbonize the economy,” Bacow said in a letter posted to the school’s website.
The Biden administration this week called for solar energy to power nearly half the electric grid by 2050 . It is now just 3% of the power supply.
This week’s announcement marked a shift for the Harvard administrator.
When student activist group Divest Harvard in 2019 interrupted the Harvard-Yale football game with a protest, Bacow said then he supported their right to express their view, but said he wished it had not centered on disrupting the game. He also said he stood by the school’s stance to keep oil and natural gas in its portfolio, t he Harvard Crimson reported at the time .
Bacow and former Harvard presidents had long stood in opposition to divestment, suggesting that the endowment should not be used for political means, the school’s paper said then.
Meanwhile, the university’s indirect investments in the fossil fuel industry “are in runoff mode,” Bacow added in the Thursday letter. The indirect investments, made through private equity funds, make up less than 2% of the endowment.
Yale University over the summer shared an initial list of fossil fuel companies now ineligible for investment by its endowment in accordance with what the school called its recently adopted ethical investing principles.
The divestment comes during a resurgence for crude oil prices, up 44% year to date, and natural gas prices, which have nearly doubled this year, as well as their corresponding stocks. The SPDR S&P Oil & Gas Exploration & Production ETF /zigman2/quotes/203527521/composite XOP +3.10% has a year-to-date total return of 38%.