For a Carbon-Free Future, Divestment is the Wrong Answer

This past Wednesday, in an echo of their week-long blockade of Massachusetts Hall in 2015, Divest Harvard prevented administrators from entering University Hall. They sought, in the words of one activist quoted in The Crimson, to “shut down business as usual.” In particular, they urged Harvard to announce a moratorium on investments in coal as well as to hold a University-wide meeting on divestment from fossil fuels in general. In contrast, the University has reiterated its long-standing view that divestment is both ineffective and politically dangerous.

We have long stressed that climate change represents one of the most pressing challenges of our generation. The science is clear, and there are many hard statistics that are equal parts drastic, unprecedented, and disconcerting: the global temperature has risen by 1.7 degrees Fahrenheit since 1880, the sea level has risen by 3.3 millimeters per year on average over the past 100 years, and levels of carbon dioxide are at their highest point in the past 600,000 years.

In light of these sobering statistics, it is all too easy to construe Harvard’s current or prospective investments in fossil fuels as a form of derelict denialism or opportunistic economic myopia by one of the world’s foremost institutions of knowledge. But this debate between divestment activists and opponents is not one between those for and against climate science, nor between those for and against climate action, nor even between those for and against the urgency of present action. It is solely about whether divestment is a net positive strategy for reducing the risk of anthropogenic climate change.

We have expressed our criticism for the strategy of divestment many times in the past. Though the specific demands of Divest Harvard have changed, their underlying philosophy toward combating climate change has not. Simply put, it is the supply of and demand for fossil fuels that creates the market valuations of energy companies, not the reverse. Divestment has no ability to alter these basic economic realities.

Were Harvard to sell its minimal positions—at recent count, 0.2 percent of endowment holdings—in energy investments overnight, other investors would acquire these stakes, presumably understanding that the University’s decision was politically, not financially, motivated. In the unlikely event that Harvard’s sale were to temporarily depress the valuation of these companies, the amount of gasoline pumped, electricity used, and heating oil needed would still remain unchanged. So too would the amount of oil drilled, coal mined, and natural gas harvested. Harvard might be the poorer, but emissions would be the same.

Any case for divestment therefore operates purely on the symbolic level. Given that Divest Harvard’s most recent protest merely argued for the formalization of the coal investment moratorium Harvard has already instituted, they have conceded as much.

Proponents claim that a strong stance by a prominent institution such as Harvard, however negligible in pure economic terms, could serve as a catalyst for further action on climate. First, such claims overlook Stanford’s decision nearly three years ago to divest from coal positions. More broadly, it is quixotic to suggest that a relatively minor portfolio change by Harvard Management Company will convince the public and policymakers of the necessity of climate action. American presidents, foreign governments, celebrities, and nearly the entire scientific community have already emphasized the need for change. So too has Harvard’s already robust advocacy for climate solutions.

In more normal times, it might be tempting to see divestment, however ineffective on various levels, as a no-risk option. Suffice it to say that these are not normal times. As Harvard has long argued, using the endowment as a political tool is risky, and doubly so when President Donald Trump has floated proposals for taxing endowments. Such measures would be deeply harmful to the endowment’s ability to finance Harvard’s mission.

We have expressed our desire for Harvard to recommit itself, among other issues, to more generous union contracts, new social spaces, a bridge program for low-income students, expanded financial aid, increased faculty hiring, the establishment of new academic departments, and accelerated house renewal. None of these changes are possible without a robust endowment, especially in the context of a strained and overstretched Faculty of Arts and Sciences budget.

Indeed, absent strong investment returns, FAS administrators may be forced to cut research funding, much as they did during the financial crisis. These cuts may even impact Harvard’s climate research spending—amounting to tens of millions of dollars cumulatively—or resources like the Climate Change Solutions Fund, which recently provided a total of $1 million in funding to various projects seeking innovative solutions to climate change.

We sincerely hope that Divest Harvard is right that coal and other fossil fuel companies are on the wrong side of history. But President Faust and other University leaders are policymakers, educators, researchers, and administrators. We encourage them to continue to prioritize the practical value of Harvard’s work—including the real ability to conduct research to understand the challenge of carbon emissions and develop innovative energy solutions that reduce them—over the impulse to feel good about our high-minded moralism.

We should be united in working towards a carbon-free economy. For now, however, we hope Faust and others continue live in the world that is, not the one they may wish it to be.