Early last month, Harvard President Drew Faust wrote an open letter to the Harvard community about proposals that Harvard divest from fossil fuel companies. In a decision with which we strongly disagree, President Faust wrote that she and the members of Harvard’s governing board “do not believe that university divestment from the fossil fuel industry is warranted or wise.”
We will discuss why the opposite conclusion would be both “warranted and wise,” but first we will lament the absolutism of the President’s statement and policy, which left no room for even gradual progress towards divestment. While we recognize that most investment portfolios like Harvard’s include a variety of investments—including hedge funds, mutual funds, and more—thus leaving few opportunities to pick or choose from a menu of specific stocks, over time Harvard should move aggressively toward investments that do not include fossil fuels. Any hope of holding the globe to a two-degree Celsius increase in temperature—a target agreed upon by 141 nations, and the importance of which is reiterated in the most recent IPCC report—requires that 80 percent of the world’s proven fossil reserves stay in the ground. The fact that these reserves are currently carried on the balance sheet of publicly traded fossil fuels companies strongly supports the argument for an investment strategy that transitions away from these companies.
President Faust switches to a different argument when she says that the issue of divestment is an issue of politicizing investment decisions. While we agree that Harvard should not use its endowment to further narrow, one-sided, self-interested political ends, we reject the notion that there is anything “political” about climate change. Over 97 percent of climate scientists, led by many of Faust’s own faculty, have agreed that anthropogenic climate change is a scientific reality. Climate change is not a political issue; it is a moral reality.
Faust seems to argue that Harvard’s investment decisions should never be influenced by considerations other than maximizing return. There is a deeper issue here, which is that of whether a mission-driven educational institution can ignore its own core values in making investment decisions without damaging its ability to achieve that mission to educate. We all understand the importance of teaching by example. Students learn from the culture and the behavior of an institution and its leaders as much as they learn from classes. Presumably Harvard would not argue that its values have no bearing on its hiring or compensation policies. Why is investment different?
In the past, Harvard has decided to divest from companies engaged in the manufacture of tobacco products, as well as certain companies involved in oil production activities with the government of Sudan, which had been found to be engaging in genocide. In other words, Harvard has decided that the values of the institution were irreconcilable with holding those particular investments. There is no greater moral challenge facing our society today than that of climate change. If we remain on our current path, the wealthy world’s fossil fuel consumption will place hundreds of millions of mostly poorer people in harm’s way, and will leave our children faced with a future characterized not by possibility and opportunity but instead by the need to manage the horrendous impacts of climate change. If ever there was a moral challenge facing our society, this is it.
A third point President Faust makes is that the University should use its voice and power not to ostracize fossil fuel companies but to engage these companies in constructive dialogue. This statement sounds reasonable, but it ignores the reality that the fossil fuel industry as a whole has spent hundreds of millions of dollars corrupting our political system to ensure that it does not have to operate on a level playing field. The industry has also spent money manufacturing and spreading doubt among the American public about the very climate science being produced by institutions like Harvard—all at the cost of the poorest around the world, and of our children and grandchildren’s future.
Rather than reject the notion that Harvard’s investment decisions could and should be used to influence the fossil fuel industry’s practices, why not take advantage of Harvard’s community of scholars to develop a set of principles which would constructively guide Harvard’s investments related to fossil fuels? These principles, for example, could include divestment from companies that are actively supporting a sinister campaign to spread doubt about climate science or companies engaged in the most polluting practices.
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