How Student Activists Pushed Harvard to Divest from Fossil Fuels

The U.S. Securities and Exchange Commission (SEC) has sketched out the first mandatory rules for public companies to disclose their carbon footprint and risk from climate change. The proposal would require all publicly traded companies to state climate-related risks their businesses face in reports they file to the FCC. In addition, emissions they emit as well as material emissions from suppliers and customers would also be required for disclosure. Companies that have publicly pledged to cut their emissions or reach other climate-related goals would need to lay out detailed plans and progress.

A couple of things worth noting: This is still a proposal, not a requirement or a law. We're in the middle of a 30 day comment period on this, and a lot can happen. There's also a lack of clarity in the proposal that still needs to be addressed. According to the proposal, whether a company makes a target or whether a company has a transition plan is up to them. But at the heart of it is the SEC's desire to have companies provide information on management's role in adjusting a business's strategy in response to climate change risk so that investors can make better informed investment or voting decisions. U.S. regulators are pretty late to the game on this one. The European Central Bank and other European regulators have made climate risk disclosures mandatory since 2020.

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Meet Connor Chung

Connor Chung is one of the main organizers behind Divest Harvard, an activist organization of Harvard students, alumni, and faculty. He is also a junior at Harvard with a concentration in History of Science and Classics, and his academic interests include issues of climate policy, technology ethics, and economic justice. Additionally, Mr. Chung is a research assistant at the Radcliffe Institute for Advanced Study and a writer for Satire V, Harvard's undergraduate-run humor publication.

What's in This Episode?

Universities in the United States are sitting on endowments worth hundreds of billions of dollars. That money has been invested for decades and has compounded over and over to produce staggering sums of wealth for the most prestigious universities in the country. Harvard University alone boasts an endowment greater than $50 billion. But up until 2021, a large percentage of that endowment was invested in the fossil fuel industry. Last September, Divest Harvard, a student-led organization inside the university, pressured Harvard's trustees and its president to wind down those investments after more than a decade of protests, student actions, and lawsuits. Divest Harvard's victory paved the way for other student-led organizations to pressure their universities to do the same thing. But the battle to wrest university endowments from the grips of the fossil fuel industry is not over. Connor Chung is one of the lead organizers of Divest Harvard, and he joins us now on the Green Investor. Welcome, Connor.

Conner:

"Thanks so much for having me."

Caleb:

"You're an organizer, but you're also a student at Harvard. What year are you, what's your major, and how did you get into this?"

Caleb:

"Yes. So, I'm a junior at Harvard, and I got into this my freshman year because the climate crisis is one of the defining issues for our generation. Coming to university, I was really excited to be part of a community that could give me the tools to make a difference on this crucial issue. The more I learned about Harvard's investment practices, the more heartbroken I was to see that this institution with such a potential to make a positive difference, due to it's outsized financial power, due to its moral and academic power, and so on, was actively supporting the companies that profit from the destruction of our future. So, it's in that context that I first decided to get involved in the fossil fuel divestment movement, and I have been proud to be part of it ever since."

Conner:

"You guys are making things happen there, and we're going to get into that in a second, but tell us about Divest Harvard. When was it started, who started it, and what were the original goals when it was started?"

Conner:

"So, we are in year 10 of the fossil fuel divestment movement or, more broadly, Fossil Fuel Divest Harvard was one of the early organizations in it. And a decade ago, students and activists and scholars began to realize that there was a fundamental problem, that the business model of fossil fuel companies is simply mathematically incompatible with the scientific consensus. The amount of oil, gas, and coal at producer's fingertips is far larger than the magnitude that can be safely burned. And thus, if we don't do anything, we are either on track for a massive ecological catastrophe or a mass of stranded assets."

"So, faced with this problem, ten years ago, the activists at Harvard and elsewhere began to look to the past, at times when civil society and the financial world had confronted similar issues regarding the consequences that their money was having. And one thing people began to look to was the fight against apartheid in South Africa. When universities and churches and pensions and so on had realized that by divesting from South Africa, they could apply social and political and economic pressure to bring about equality and justice. And divestment worked in South Africa, played a massive role, and it was inspired by that. That activist decided to apply some of the same techniques here."

"So, this was the dawn of the divestment movement, and since then it's experienced some pretty incredible successes. Just a couple weeks ago, the amount of assets under management of funds that have divested crossed $40 trillion, including some of the most prestigious universities and most powerful pensions. I was proud to be one small part of this when my own institution of Harvard University, as you mentioned, the world's richest private university, jumped on the bandwagon last fall. Now, as we look to the next 10 years, activists aren't going away, and an economy that works for everyone, that protects rather than destroys our planet and our future, is in all of our interests. And activists will be wanting investors to make clear whether they want to be a roadblock or whether they want to be part of the journey to that more just and stable future."

Caleb:

"Well, you won that big battle last September. We're going to talk about that. Ultimately convincing Harvard's trustees and its president, Lawrence Bacow, to wind down its investments in the fossil fuel industry. You wanted more from that battle though, you wanted complete divestment. Why didn't the university go all the way, as far as you know?"

Conner:

"When Harvard announced its divestment from it, it was a massive victory. As you know, for 10 years, they had refused to acknowledge the reality of climate risk and of the structural peril that the climate crisis and that fossil fuel companies activities pose to their portfolio. And so, it was a massive reversal and it was a massive win for our communities and our planet when Harvard University announced that it would divest from fossil fuels this past fall."

"And, as you know, since then, we've been continuing to push that we want Harvard to... we want to ensure that this is carried out in good faith and with requisite haste. There is no time to spare when it comes to protecting Harvard's endowment from climate risks, when it comes to taking on fossil fuel companies and working towards environmental justice. We want to make sure that this is carried out at the necessary scope. There's no room for half measures. And we continue to fight to ensure that Harvard cuts other fossil fuel conflicts of interest. So, absolutely, the fight continues. But we were just so proud and so honored to be a part of this victory at Harvard and a part of this broader movement this past fall."

Conner:

"Were you able to sit across the table from Bacow and the trustees? And if so, what were those conversations like?"

Conner:

"Yeah. So, we had met with them a number of times in the previous years. And we always appreciated the dialog, but it was clear that they were just not on the same page with us when it came to the reality of climate risk and the urgent need to take on fossil fuel companies and act in a socially responsible manner in regards to their investments."

"And so, that's why we thought it was very important to couple meetings and conversations with focus and with legal challenges and with efforts to organize our community. We think was the combination of pressure on all of those fronts from students, faculty, and alumni over 10 years that was influential in pushing Harvard to finally shift on this and, in doing so, send out massive ripples across the financial sector."

Caleb:

"Let's get into the legal complaint because Divest Harvard filed a legal complaint with the Massachusetts attorney general in 2021, arguing that the university's fossil fuel investment holdings violate the state's Uniform Prudent Management of Institutional Funds Act, which outlines certain charitable responsibilities for all nonprofit institutions. Such an interesting angle to take from the legal front versus, "Hey, you're just destroying the planet by investing in these companies." You actually found a statute to lean on. How did that come to pass?"

Conner:

"For 10 years, we tried to make the argument that fossil fuel investments were immoral. It was in March of last year that we decided to kick it up a notch and say that these investments were also illegal. And the argument was was simple: institutional investors have a duty to invest in a prudent manner. They have a duty to act with care, skill, and caution to preserve the value of the fund in the long run. And fossil fuels are simply a horrible way of doing this. In the long run, they're a bad investment, whereas divesting is a good bet. There is a recent study out from BlackRock that showed that funds which divest universally don't lose money and indeed often make money. And that's coupled with the massive social consequences of fossil fuel companies, and thus the incompatibility of holding those stocks with the specific charitable missions of a nonprofit investor like the Harvard."

"And so, it's with those two arguments, the pure prudence argument that these are a financially bad bet and the charitable purpose argument that these contradict Harvard's legal responsibilities as a charity... it's taking those arguments that we decided to put some legal pressure on Harvard. So, as you know, we filed the complaint with the Massachusetts attorney general. It was backed by a number of top scholars in the field, including one of the legal scholars who helped write the law in question. And we think it made a difference. The Massachusetts attorney general was absolutely taking it very seriously, we met with their office several times."

"And Harvard was taking it very seriously too. Our organizations noted that when Harvard announces that they divested, they all but quoted the language of our complaint. There's still much broader applicability if the law in question exists in 49 out of 50 states. Fossil fuels are not a good investment by any fiduciary standards in any part of the country, and so we've been thrilled to see this legal argument continuing to spread. And we are sure that as the incompatibility of the fossil fuel industry and the interests of the financial world in society more broadly become clear, legal questions about the fiduciary soundness of fossil fuel assets will only continue to grow."

Caleb:

"Yeah. Talk about precedent. You were helping set one big time here. And you're not just calling for Harvard to completely divest from the fossil fuel industry, you want the university to reinvest. You say you're calling for Harvard to 'leverage its financial power,' which is great for reparative justice by supporting environmentally sustainable, socially responsible, and community-based investment. You want them to redeploy the capital towards things that you think are better."

Conner:

"Absolutely, because it's the right thing to do, and it's the financially smart thing to do. The simple truth is that oil is an investment of the past, and institutional investors have a duty to look towards the future. That's why it's simply incoherent to claim to be a responsible investor while investing in fossil fuels. And that's why investors have a massive role to play in helping bring about the energy transition and helping build out renewable energy and green technology and justice solutions for our communities and our planet. In doing so, they'll be on the right side of this crucial issue, but they'll also be able to benefit by ensuring that they're on the right side of this massive economic transformation."

Caleb:

"While our listeners are very familiar now with ESG, you guys are right in the middle of that—the environmental part of it, the social part of it, and the governance part of it. And you're pushing this big $50 billion plus endowment to try to do the right thing. I think it's absolutely fascinating. You're also calling for Harvard to address what you call 'gaping holes' in its Net Zero by 2050 endowment pledge by outlining these interim targets for endowment decarbonization, guaranteeing the investments will focus on absolute emissions reductions rather than the carbon offsets that a lot of companies try to do, and the commitment to pursue investment opportunities that support what you're calling 'a rapid and just transition to a clean energy economy.' You guys are not playing around here. You want the money redeployed for the right reasons."

"So, these are big asks. Not only are you asking them to take money out of these companies that they've invested in, probably for decades—they probably have a lot of Harvard alum board members on them—you're saying, 'take it out of here. And put it in the places that matter to the most.' How receptive is the university to these other demands?"

Conner:

"We're confident that these demands are the steps which any socially responsible investor needs to be thinking about. Fossil fuels are simply an irresponsible investment by this point. Investors have a duty to be cautious, and investment in coal, oil, and gas is not the way to fulfill that. And investors have a duty to think in the long term and to seek to act in a responsible way that will protect their own bottom line and the society in which all these funds exist. And so, that's what we are excited about, the potential that institutions like Harvard have when it comes to ensuring that their financial powers are used for good."

Caleb:

"It goes even beyond that. I got really lost reading all the literature cause there's so much good stuff on your site and throughout, but you're also asking Harvard to stop lending its prestige and its power to the fossil fuel industry. It's a powerful name in ways other than investment. You're saying you want Harvard to cease allowing fossil fuel interests to fund campus research and programing or recruit on campus. You don't want the Big Oil companies looking for the next generation of great engineers there. At the very least, you're saying Harvard must take immediate steps to make transparent the imprint of fossil fuel industry funding on campus and in the research it produces. That's a pretty big step too. Why is that important to you?"

Conner:

"Fossil fuel companies are just structurally misaligned with the sort of action we need on climate, and thus, when they partner with Harvard—whether it's the fact that for many years Harvard was defending investments in them, or whether it's continued entanglements in climate research—it allows them to greenwash themselves. It allows them to say, 'Oh, look, we're responsible. We're working with actors like Harvard.' Meanwhile, Harvard's not getting a lot in return. Their name is simply being used to legitimize the actions of these companies. So, that's why we think divestment was an essential step and why we continue to push for Harvard to ensure that, for example, fossil fuel money is not underlying climate research where it is inherent and unmanageable conflict of interest."

Caleb:

"You've got some buildings that are named after families that made their fortune in the fossil fuel industry. You've got some research centers there that are named after that. Probably some grants running through there. This, again, is not such a simple switch for a university to turn off, and we all know that. How is Harvard been responsive to to these types of demands? 

Conner:

"We've been pushing them lately on a lot of the conflict of interest issues. And there's actually been quite a lot of interest from administration and so on because they realize the importance of protecting the integrity of Harvard's research. The fossil fuel industry is simply not a good-faith actor. They've spent years defending their business model through things like attacks on academia, including attempts to delegitimize and discredit some of Harvard's very own faculty. This is why it was dangerous for Harvard to be defending investments in them for many years, and why we have been grateful that they have been interested in hearing us out on why more broad conflicts of interest are not in the institution's interest or in the interests of the planet."

Caleb:

"As we said at the top, there are other universities that are starting to follow suit. Other groups like yours that are popping up in other universities, that must be gratifying to watch. But what's the ultimate end goal with your consortium and all these other groups around this space? Is it complete divestment, as you've outlined for Harvard? And what are you looking to do in terms of cooperation with groups like yours across the university landscape?"

Conner:

"The goal is climate justice. The goal is a cleaner and fairer world for everyone. And divestment is just a very important tactic, as we see it, to get there. The evidence is clear that divestment works. I mean, even fossil fuel companies have admitted on the record in government disclosures, for example, that the movement is posing a real risk to their ability to finance the status quo. And that's... what students are doing on campuses, what worshipers are doing in church pews, what pensioners are doing is having a real impact."

"So, that's why divestment has scored a number of wins so far and why we are really, really gratified to see it continue to spread around the country. I mean, just last month, students at five elite schools—Princeton, Yale, Stanford, MIT, and Vanderbilt—filed legal complaints with their attorneys general, alleging similar breaches of fiduciary duty by investments in fossil fuels. So, divestment will continue to spread so long as players in the financial sector remain unserious about the need to take part in a just transition. And activists look forward to helping investors ensure that they're part of the solution, not the problem."

Caleb:

"Yeah. Well, you're doing it for sure. And this is a 10-year-old organization. Divest Harvard has been around for a while. How did you guys ensure the continuity? How did it get passed from the last person to you? And how do you keep it going and keep the momentum going so students in the future can keep the movement as strong as it is?"

Conner:

"It seems to me that, for many years, Harvard's response to the divestment movement was hoping that it would just go away, that it would just die out as people cycle in and out and graduated. And you didn't see that just because the climate crisis is not some fad, it's not some passing interest for our generation. It is literally our futures on the line. So, that's why I think students stayed engaged in this fight for a decade because we believe that Harvard, as a sophisticated and powerful investor and leading institution, has the potential to be a big part of the solution. That's why we held them to account for 10 years because we knew they could do better, and we are glad that eventually they saw it our way."

Caleb:

"Incredible. What an incredible story, and it's still unfolding. So, what's next for Connor Chung? You're a junior, but you think thinking a law degree? What does this make you want to do with your career now that you've been so heavily involved and you've been a participant in really creating change? What's next for Connor Chung? 

Conner:

"Oh, gosh. Personally, I'm not sure. I will just say participating in the divestment movement has certainly been an incredible honor, and it's taught me so much. And I think the same is true for so many activists around the country. For them, this has been a political education, a financial education, and this has given a lot of us just so many tools for making a positive difference. And we look forward to continuing to use them both to hold investors to account within the divestment movement specifically and to fight for climate justice more broadly."

Conner:

"It's going to be fascinating to watch. I have a feeling we're going to be talking to you for years to come. And folks, we're going to link to the Divest Harvard's website and some of the papers that it's put out, so you can check them out yourself, but definitely do check it out because what's happening up there in Cambridge, Massachusetts, among this group is groundbreaking and it is making a big difference. Connor Chung, one of the principal activists with Divest Harvard. Thanks so much for joining the Green Investor. Really good to have you."

Conner:

"Well, it really took a village to make victory at all possible and to power the broader divestment movement, but thank you so much for speaking with me. It's been wonderful."