A Harvard education purports to teach its students the skills they need to make the world a better one. We are encouraged to think critically about social problems, to create our own innovative solutions to them, and, as a result of this education, to demonstrate the individual responsibility we each have to society.
But there is a dangerous disconnect between the principles that guide the University’s socially beneficial education and research, and those that inform the investment strategies of the Harvard Management Company, which manages Harvard’s current $32 billion endowment.
We are writing on behalf of a coalition of groups and individuals in the Harvard community known collectively as Responsible Investment at Harvard, or “RI@Harvard,” that seeks to end that disconnect. We believe that a responsible University endowment is one that aligns with Harvard’s mission, “to encourage students...to assume responsibility for the consequences of personal actions [and] to advance knowledge, to promote understanding, and to serve society,” and not one that is governed by short-term profit-seeking and disregard for its social and environmental impacts. Moreover, we believe that the University endowment should adhere to principles of social responsibility, transparency, and accountability in addition to upholding its fiduciary responsibility
Together, we call on the University and the HMC to make the following changes to the school’s current investment strategy to bring it closer to these principles:
First, make a public commitment not to reinvest in HEI Hospitality, for its union-busting tactics and mistreatment of workers. We commend the University for recognizing concerns from community members about its investment, but we urge the HMC to fully commit itself to not reinvesting in the fund until all of the problems are corrected. Furthermore, the school should not make any capital commitments to Alpha Natural Resources for destroying mountains with mountaintop removal coal mining and Emergent Asset Management for grabbing land from smallholder farmers in sub-Saharan Africa.
Second, the University and the HMC should establish a social choice fund. This fund would give alumni an opportunity to direct investment of their donations to local community development financial institutions which provide responsible lending and financial services to under-served low and moderate-income communities in the greater Boston community. As Cambridge's largest employer, Harvard has the most direct impact—as well as economic and environmental linkages—in our local community. As a result it is to this population that it is accountable. How better to demonstrate our responsibility to our community than through direct local investment
The HMC must integrate environmental, social, and corporate governance criteria in all asset classes of the endowment through the creation of a new responsible investment unit within HMC. This unit would identify opportunities for financially robust investments with a specific positive impact, incorporate these criteria into general investment decisions, engage on important issues with corporations, and,consider the negative and positive impacts of Harvard’s investment decisions. Detractors of responsible investing have long argued that while maximizing social good is admirable it is not worth sacrificing the maximum possible return on investment. Yet a growing body of evidence suggests that integrating environmental, social, and governance criteria does not negatively impact return on investment and actually leads to a more complete understanding of material issues, thereby lowering risk and possibly increasing returns over the long term.
As part of this avowed commitment to accountability, the Harvard Corporation should modernize the Advisory Committee on Shareholder Responsibility and the Corporation Committee on Shareholder Responsibility to make them more transparent and accountable. Specifically, it should expand the mandate of the Committees beyond proxy voting on directly-held investments to include evaluating and acting on the concerns of Harvard community members surrounding holdings and reporting to the community on the success of HMC’s responsible investments. The University's investment decisions cannot occur in a “black box,” removed from the input and examination of Harvard community members.
Finally, Harvard must promote transparency and accountability in the Harvard endowment by annually disclosing investment holdings, the asset values of individual investments, the identity of outside managers and their fee arrangements, as well as HMC compensation arrangements. Annual disclosure would allow the HMC to continue to capitalize on its proprietary strategies, while still allowing Harvard community stakeholders to make sure that it is making good on its promise of responsible investments.
First and foremost, we are dedicated to the responsible investment of Harvard’s endowment. In the coming months, RI@Harvard will release a series of papers further explaining our positions to the Corporation and the broader community. We are committed to an action-oriented campaign rooted in a nuanced understanding of the policies we support. While we first aim to work with University and HMC leadership to accomplish our goals, we are prepared to escalate our tactics if our voices are not taken seriously
As we launch our effort to build a broad coalition of students, alumni, faculty, and other allies to work for the implementation of the above proposals, we invite you to join us. Become a signatory of our statement of principles by visiting join.responsibleharvard.com.
Harvard’s money matters, and together, we will change the way Harvard invests it, for a better future for all.
Evelyn D. Chow ’12 is a psychology concentrator living in Adams house and a member of the Harvard College Social Responsibility Trust. Samuel F. Wohns ’14 is a social studies concentrator living in Quincy house and member of the Harvard Student Labor Action Movement. Alli Welton ’15 lives in Greenough and is a member of the Students for a Just and Stable Future.
Rethinking ReinvestmentIn light of the controversy surrounding HEI’s treatment of its workers, Harvard’s administration should consider halting further investment in HEI.
Investing in Harvard’s FutureRecent research has demonstrated that responsible investing can provide market rate returns—and, sometimes, perform even better than conventional investing strategies.
Responsible InvestmentBecause HMC is reluctant to share information relating to its investments, the University’s current approach to investments may be more socially conscious than advocacy groups realize.
Toward a Social ChoiceWe still have far to go to achieve our end goal of creating a social choice fund within Harvard’s endowment.
Future of the Social Choice FundThe University has stipulated that 20 percent of the fund’s initial value will be allocated to fund student financial aid. Although this is a certainly an admirable gesture, the removal of such a large percentage of the fund annually might stymie its growth.
HKS Students To Vote on Social Choice Fund ReferendumAfter a fall semester that saw College students vote in support of a social choice fund and the University announce its plans to create one, Kennedy School students will vote next week on a referendum calling for Harvard to demonstrate a financial commitment to the new fund.