Larry Milstein

Members of Harvard University’s highest governing body told students earlier this month that Harvard has moved away from investments in coal, reflecting an investment strategy similar to that of its peer universities — including Yale.

According to a Oct. 14 article in the Harvard Crimson, two members of the school’s board told students involved with Divest Harvard — a campus group urging the school to divest from all holdings in the top 200 fossil fuel companies — that from the school’s perspective coal investments are not currently financially prudent. In April, Yale University Chief Investment Officer David Swensen similarly noted the excessive risks of investments in thermal coal miners and oil sands producers when announcing the removal of about $10 million of Yale’s endowment from two publicly traded fossil fuel producers.

Harvard and Yale have joined peers including Boston University and Stanford University in moving away from certain fossil fuel investments. However, like every other Ivy League college, Yale has not committed to a policy of blanket divestment from the coal industry.

Chelsea Watson ’17, communications director for Fossil Free Yale, said it was important to note the public nature of Harvard’s investment decision, noting that the public announcement of such decisions is a sign of political change in and of itself.

“We don’t often see universities making large announcements about moving away from other sectors, but this seems to have become a reoccurrence with fossil fuel investments,” Watson said. “Harvard’s recent announcement regarding coal investments and Yale’s $10 million divestment are clear responses to the powerful divestment movements across the globe.”

Harvard and Yale’s decisions to exit positions in certain fossil fuel assets have come at a challenging juncture for the coal industry. Efforts including the Beyond Coal Campaign by the Sierra Club, a national environmental advocacy group, have led to the retirement of about 200 coal plants across the country, more than 40 percent of the national total.

The plight of the coal industry has been a contentious issue in the ongoing presidential election. For instance, Hillary Clinton’s LAW ’73 announced on March 13 that she intends to “put a lot of coal miners and coal companies out of business” and move to cleaner energy sources.

While Nathan Lobel ’17, a member of FFY, said that he was encouraged by the progress made by the divestment movement, he lamented Yale’s lagging behind some of its peers in this regard. Stanford announced its divestment from coal mining companies in 2014, and Syracuse said last year that it will no longer directly invest in publicly traded companies whose primary business is the extraction of fossil fuels.

For Lobel, Harvard’s decision to stop investing in coal is encouraging, and points to the steep drop in power that the coal industry has witnessed in the recent past.

“We all joined the fossil fuel divestment movement because we saw that fossil fuel corporations held far too much power in our political process,” Lobel said. “Harvard’s commitment to stop investing in coal demonstrates that we are making progress.”

Since Swensen indicated in August 2014 that awareness of climate change would be an important tenet of the University’s investment strategy, the Yale Investments Office has taken a number of steps beyond exiting certain holdings in addressing the social and financial costs of climate change.

In an April 2016 announcement to the campus community, Swensen noted that a letter he had written to the endowment’s external managers in 2014 instructing them to consider the implications of climate change is now shared with all new external partners.

Swensen added that while public scrutiny has focused on investments in fossil fuel producers, the Investments Office approaches the issue of climate change more broadly by considering the impact of climate change across all its investments. For instance, the office had asked managers to consider the potential climate change-related issues in owning low-lying coastal real estate, Swensen said in the announcement.

In an interview with The New York Times in April, Swensen also indicated that a potential deal with an energy company fell through because of the company’s dismissal of the risks associated with climate change.

“That investment had even been approved by the endowment’s board,” Swensen told the Times. “But when we sat down with the company and brought up these issues, they denied it was a problem, so we did not go forward with the investment.”

At Yale, though the Investments Office has directly contributed to the University’s sustainability efforts for over a decade — including initiating efforts to invest in wind power projects in 2007 — Swensen told The New York Times that the office’s climate change-related strategy over the past two years was partially spurred by the Yale Corporation’s vote against divesting the University’s assets from fossil fuel companies in August 2014.

“How one determines the net socially injurious impact of fossil fuel combustion by particular companies, and how one goes about identifying the companies responsible for the incremental emissions that cause injury — and thus who should be held accountable — are questions fraught with difficulty,” read a statement from the Corporation released after the August 2014 decision. “We do not believe it a wise use of University resources to try to engage with an impracticably large number of companies, or to do so based on metrics that are not reliable for making the ethical judgment our policy deems necessary to justify consideration for divestment.”

As a result, while the Investments Office has indicated the importance of considering risks associated with climate change for its investments, it has no specific mandate to avoid investing in companies involved in the extraction of fossil fuels. A recent filing with the Securities and Exchange Commission indicated that as of August 2016, Yale has a direct investment worth over $200 million in Antero Resources, a company engaged in the exploitation, development and acquisition of natural gas.

According to Lobel, it is important for universities like Yale to move beyond solely using the financial risk associated with climate change as a basis for moving away from fossil fuel investments.

“It is not enough to stop investing in morally bankrupt industries just because they are financially bankrupt as well,” Lobel said “We need our universities, dedicated to such lofty goals as truth and light to live up to their charters and take a stand against an industry that is wrecking our planet, exploiting marginalized peoples and distorting our democracy.”

Robert Dubrow, professor of epidemiology at the School of Public Health and an outspoken advocate for fossil fuel divestment, said in an email that the University’s refusal to divest from fossil fuels is understandable. He wrote that he believes the Corporation sees the main goal of Yale’s investment strategy is to maximize growth of Yale’s endowment and thus does not want non-financial considerations to interfere.

“A decision to divest permanently based on the long-term financial outlook would be welcome because it would represent a statement about the world’s energy future,” Dubrow said. “But divestment on this basis would not have nearly the impact of divestment based on moral principle.”