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Harvard Indirectly Holds Nearly $100,000 Worth of Stocks in Tobacco Companies

Harvard Management Company still maintains indirect investments in the tobacco industry.
Harvard Management Company still maintains indirect investments in the tobacco industry. By Aiyana G. White
By Ruoqi Zhang, Crimson Staff Writer

The Harvard Management Company indirectly holds an estimated $98,265.08 worth of shares through exchange-traded funds which include tobacco companies, an industry Harvard divested from in 1990, according to The Crimson’s analysis of HMC’s public filings to the Federal Securities and Exchange Commission.

ETFs are exchange-traded securities made up of assorted securities that usually mirror the performance of certain indices. They allow investors to put money into a broad array of companies without having to hold stock in each of the component companies.

Harvard indirectly held equities of several tobacco companies including Altria Group, Philip Morris International, Universal Corporation, and British American Tobacco by the end of 2019 through three widely-traded ETFs that cover a wide range of stocks. According to HMC’s filings, these ETFs include iShares Core S&P 500 ETF, iShares Core S&P Small-Cap ETF, and Vanguard FTSE Developed Markets ETF.

In May 1990, Harvard divested from the tobacco industry and adopted a policy that prohibits the University from owning shares of tobacco companies in the future. At a forum last April about divestment, University President Lawrence S. Bacow said the decision to divest from tobacco included barring the product from campus and prohibiting research funded by tobacco companies.

Asked about the holdings, HMC spokesperson Patrick S. McKiernan referred to HMC’s sustainable investment policies.

If the University instructs HMC to divest, HMC would restrict direct holdings of related stocks by internal portfolio managers and outside investment advisors trading in Harvard’s name, according to its sustainable investment policy. The restriction, however, is not extended to “investment advisers of commingled funds where Harvard is not the sole investor” — which is the case for the three ETFs with tobacco investments.

Over the past year, Bacow has consistently opposed divestment from the fossil fuel and prison industry amid protests from students and faculty. Bacow argued at the April forum that the University could never divest fully from fossil fuels, as it did with the tobacco industry.

“The day after, if we were to divest, we’re still going to turn on the lights,” Bacow said in April. “We would still be dependent on fossil fuels.”

Each of the ETFs allocates a certain percentage of their investments to tobacco companies.

iShares Core S&P 500 ETF allocates 0.32 percent and 0.55 percent of its fund to Altria Group and Philip Morris International, and iShares Core S&P Small-Cap ETF allocates 0.19 percent of its fund to Universal Corporation as of last Friday, according to iShare’s website. Vanguard FTSE Developed Markets ETF allocates 0.50 percent of its fund to British American Tobacco as of January, per Vanguard’s website.

The values of the University’s holdings in the three ETFs total around $41 million at the time of the University’s filing. In total, Harvard roughly puts an estimated $98,265.08 into tobacco companies through the three ETFs.

Harvard’s investments in ETFs comprise roughly 6.5 percent of its total U.S. securities holdings. Only about 2 percent of Harvard’s $40.9 billion endowment is publicly available through quarterly disclosure to the Securities and Exchange Commission.

Harvard only divests in “very rare” occasions when companies engage in “deeply repugnant and ethically unjustifiable” conducts, according to the University’s sustainable investment policy. In addition to tobacco, Harvard divested from companies involved in South African apartheid in 1986 and a company tied to Sudanese government after the Darfur genocide in 2005.

—Staff writer Ruoqi Zhang can be reached at Follow him on Twitter @RuoqiZhang3.

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