Harvard will divest itself from holdings in fossil fuels, the university’s president Lawrence Bacow announced late Thursday.
Harvard Management Company, which oversees the university’s vast endowment of almost $42 billion, has already been reducing its financial exposure to fossil fuels and has no direct investments in companies that explore for or develop further reserves of fossil fuels, Bacow said in a message posted on the university’s website.
The university has legacy investments in a number of private equity funds with holdings in the fossil fuel industry. Those indirect investments constitute less than 2% of the endowment, according to Bacow.
The school has not made any new commitments to these limited partnerships since 2019 and has no intention to do so going forward, he added.
Bacow said the legacy investments are in “runoff mode” and will end as these partnerships are liquidated.
Harvard has already committed to achieving net-zero greenhouse gas emissions across the entire investment portfolio by 2050, he said.
“Given the need to decarbonize the economy and our responsibility as fiduciaries to make long-term investment decisions that support our teaching and research mission, we do not believe such investments are prudent,“ he wrote.
The decision follows years of protests from students who have pressed Harvard to divest from fossil fuel companies.
A campus campaign created almost a decade ago called Fossil Fuel Divest Harvard, reacted by saying: “It took conversations and protests, meetings with administration, faculty/alumni votes, mass sit-ins and arrests, historic legal strategies, and storming football fields. But today, we can see proof that activism works, plain and simple.”
The group also tweeted about its “massive victory”.
Former vice-president, environmentalist and Nobel laureate Al Gore tweeted that Harvard “is finally divesting” from fossil fuels and added: “Let this be a strong signal to other institutions that the era of fossil fuels is coming to a close.”
Harvard was also coming under pressure from progressives in the Massachusetts state legislature.
The elite private Ivy League university, based in Cambridge, Massachusetts, has by far the largest endowment of any university in the world.
Harvard is building a portfolio of investments in funds that support the transition to a green economy, Bacow wrote.
He said the university has made investments along with the Massachusetts Institute of Technology in the Engine, a fund that, among other things, “seeks to accelerate the development of technologies that promise to address the challenges posed by climate change.”
The university will also work to achieve “greater transparency in the greenhouse gas footprint of all of our investment managers, along with the development of protocols for assessing and reducing the footprint for entire investment portfolios,” he wrote.
“We must continue to work with our investment managers and with industry if we are to bring about the transformation of our economy that climate change demands,” he added.
Teen environment activist Alexandria Villaseñor simply tweeted: Hey @DivestHarvard, you WIN!”
Environment expert Bill McKibben noted the significance of the decision.