News Analysis: UN-Backed Investment Principles Are More Symbol than Action, Experts Say

Employing assured language and channeling scientific consensus, University President Drew G. Faust laid out a three-part initiative in a letter to the community on Monday to position Harvard as a leader in the effort to combat climate change. By investing more in climate research, accelerating sustainability efforts on campus, and signing onto the United Nations-supported Principles for Responsible Investment, Faust wrote that Harvard would help lay “the path to a sustainable future.”

Yet, in the days following Faust’s announcement, sustainability and investment experts said they are less sure that one of those parts—the change to Harvard’s investment principles—goes far enough to have more than a symbolic impact. Those experts caution that the voluntary nature of the PRI principles, while laudable, are closer to a statement of values than an actual policy for governing Harvard’s $32.7 billion endowment.

Launched in 2006 under the guidance of then-UN Secretary General Kofi Annan, the PRI Initiative brings together more than 1,200 institutional investors managing a total of more than $34 trillion assets around the common goal of integrating environmental, sustainability, and governance (ESG) standards into their investment management. Harvard’s is the first university endowment in the U.S. to adhere to the framework.

The PRI framework is centered around six principles, which include incorporating ESG considerations into investment decisions and corporate management, advocating for portfolio company transparency related to ESG issues, and reporting regularly on ESG-related progress.


While the PRI initiative provides specific suggestions for ways to reach these goals, the principles themselves are “voluntary and aspirational,” according to the PRI website and echoed in Faust’s announcement. The initiative also frequently acknowledges investment management funds’ ultimate responsibility of maximizing returns for its beneficiaries, and notes that funds should implement changes, “where consistent with [their] fiduciary responsibilities."

This non-binding framework has caused many to question whether or not agreeing to the PRI will result in any concrete or significant changes to the way the Harvard Management Company oversees its endowment.

“The PRI is laudable, but as far as I know, it’s purely a voluntary initiative that doesn’t require actual behavior change,” said Medical School professor James M. Recht, one of the principal authors of an open letter to Faust signed by more than 100 faculty members calling for fossil fuel divestment.

“I do think it’s better than nothing, but I think it would be a terrible shame if someone were to walk away from that statement thinking that somehow becoming a participant in PRI is anywhere close to the type of action that this climate emergency calls for,” Recht added.

David Wood, director of the Initiative for Responsible Investment, a research organization housed in the Hauser Center for Nonprofit Organizations at the Kennedy School, noted that the the principles’ impact on the investments of the other signatories of the PRI have been mixed.

“What we’ve seen with other signatories is that some have developed very robust programs and some have not,” Wood said.

Shoshana Zuboff, a retired Business School professor who also signed the faculty letter supporting divestment, similarly questioned the net impact of the feedback PRI analysis given that Harvard will continue to invest in the top fossil fuel companies.

“As long as we are continuing to invest in the 200 top fossil fuel companies, we have neutered any value we can extract from being signatories in this index,” Zuboff said.


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