It isn't just ETFs that are rebranding as ESG - now, Harvard's is foregoing potential hefty dividends and gains in the oil and gas industry to be able to slap the ESG title on the college's $42 billion endowment, which said this week it would stop investing in fossil fuels.
The school said it'll use its endowment to "support the green economy", according to Yahoo and Bloomberg.
We guess it's a good thing that generating free cash flow isn't important anymore.
The fund's manager, Harvard Management Co., "does not intend to make such investments in the future” and currently has no oil and gas exposure, according to President Larry Bacow.
The fund is making the change after what Bloomberg calls "years of sustained activism from students calling for fossil-fuel divestment".
Wait until the students take their first ECON 101 course and learn about discounting cash flows. Perhaps their minds will change; or the cafeteria may have to forego their favorite organic, gluten-free grass fed lunches due to budget constraints.
Regardless, Harvard follows in the footsteps of schools like the University of California and the U.K.’s Cambridge University. The University said last year it would also work to forge a path to "net zero" greenhouse gas emissions by 2050.
That, of course, wasn't fast enough for a "students group", Bloomberg wrote, who had nothing to do with their time so they took to filing a complaint in March with the Massachusetts attorney general "in an attempt to force the university to sell its estimated $838 million fossil fuel holdings".
Bacow continued: "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."
Harvard joins other names in the asset management industry in moving toward carbon neutrality and devising "net-zero" investing.
Godpseed to Harvard. Meanwhile, if you're looking for us, we'll be enjoying our 6% yield from Exxon while mining bitcoin using kerosene generators.