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Harvard's US$42 billion fund will stop investing in fossil fuels – Financial Post

Published

3 years ago

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The move comes after years of sustained activism from students calling for fossil-fuel divestment

Author of the article:

Bloomberg News

Kevin Crowley and Stephen Stapczynski

Harvard vowed last year to work with its investment managers to create a path to 'net zero' greenhouse gas emissions by 2050.
Harvard vowed last year to work with its investment managers to create a path to ‘net zero’ greenhouse gas emissions by 2050. Photo by Bloomberg files

Harvard University will stop investing in fossil fuels and instead use its giant US$42 billion endowment to support the green economy, joining a growing wave of investors moving away from pollutive industries.

Harvard Management Co., which runs the endowment, has no investments in companies that explore for or develop fossil fuels and “does not intend to make such investments in the future,” President Larry Bacow said Thursday in a letter posted on the university’s website.

The move comes after years of sustained activism from students calling for fossil-fuel divestment, and amid increasingly urgent demands from investors that financial institutions withdraw their support of businesses that are contributing to man-made climate change.

The Ivy League college, the richest in the U.S., will be following in the footsteps of peers such as the University of California and the U.K.’s Cambridge University, which have committed to divesting their endowments from the fossil fuel industry.

Harvard vowed last year to work with its investment managers to create a path to “net zero” greenhouse gas emissions by 2050. However that wasn’t fast enough for a students group, which filed a complaint in March with the Massachusetts attorney general in an attempt to force the university to sell its estimated US$838 million fossil fuel holdings, according to the Harvard Crimson.

“Given the need to decarbonize the economy and our responsibility as fiduciaries to make long-term investment decisions that support our teaching and research mission, we do not believe such investments are prudent,” Bacow said Thursday. Harvard has legacy investments in private equity funds with fossil fuel exposure but these are less than two per cent of the endowment and “are in runoff mode,” he said.


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The university will also be joining a growing group of institutional investors and governments that are responding to pressure to accelerate decarbonization efforts. China, Japan and South Korea all committed to net-zero goals last year. Beijing didn’t finance any coal projects via its Belt and Road Initiative in the first half, the first time that’s happened since it was launched in 2013, the International Institute of Green Finance said in a report.

The asset management industry is increasingly looking for ways to speed moves toward carbon neutrality. Pacific Investment Management Co. and Fidelity International are among funds devising standards for so-called net-zero investing. BlackRock Inc. Chief Executive Officer Larry Fink said last year that his firm will take steps to tackle climate change across the thousands of companies it invests in.

Despite the growing importance of climate change in investment decisions, the 10 largest U.S. public pension funds still have a lot of money invested in the biggest corporate polluters, however. Analysts at Bloomberg Intelligence recently put the figure at about US$40 billion, meaning nine per cent of the funds’ combined equity holdings are devoted to 20 high-carbon emitting companies.

Harvard Management said in 2017 it would it take into consideration the environmental impact of some its investments, but that move wasn’t seen as enough by the students. Harvard’s endowment was valued at US$41.9 billion as of June 2020, making it one of the largest among private U.S. universities.

Bloomberg.com

In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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6 days ago

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November 6, 2024

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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4 weeks ago

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October 16, 2024

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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1 month ago

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October 11, 2024

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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