Fossil Fuel Investments Cost Harvard $21 Million in Past Three Years

Photo by Olga Khvan

Earlier this month, Harvard’s administration encountered a weeklong flood of climate change activists demanding the university divest its hulking $36 billion endowment from fossil fuels. Despite increasing pressure from students, alums, and even Archbishop Desmond Tutu, Harvard has repeatedly refused to entertain the notion in any serious manner.

Among the carefully crafted talking points peddled by President Drew Faust and others is that divestment could undermine the financial stability of the institution.

A new analysis from Matthew Patsky at Trillium Asset Management blows that argument to bits.

“In a review of publicly disclosed material, we have found Harvard Management Company has lost an estimated $21 million dollars over the past three years by ignoring calls to divest and continuing to hold the world’s largest owners of coal, oil and gas reserves. The losses have accelerated recently with an estimated $14 million drop in just the past six months ending March 31st ,” Patsky wrote on a blog post on Trillium’s site.

Patsky asserts that the losses from Harvard’s fossil-friendly investment strategy likely top $100 million, but it’s impossible to know because the Harvard Management Company is as opaque as possible when it comes to revealing details about the endowment.

While these calculations use all publicly available information, I suspect that Harvard’s actual loss was considerably greater than $21 million. What makes further analysis so difficult is that Harvard publicly discloses less than $1 billion of its $36 billion portfolio. Their annual report does tell us that approximately $12 billion is invested in stocks. Assuming (given the dearth of public information) that these undisclosed investments fared about the same as the disclosed investments, that would put the total loss estimate at hundreds of millions of dollars over the past three years.

Harvard isn’t the only university insisting that investing in companies that treat the environment like a corporate cesspool is good for business. Tufts University and Boston College made similar claims this past month, also in response to divestment activists.