Paul Hodgson: Carbon zero or divest? The US city, state and university endowment conundrum says 1,240 institutions with over $14trn in AUM have committed to divest

Bill McKibben Co-Founder of, is one of the keynote interviews at this year’s RI Digital: USA 2020 conference, taking place on December 2-3. The conference is free to attend.

On 10 September this year, more than 1100 academics, scientists, and professors sent a letter to New York State’s Governor Andrew Cuomo and its Comptroller Tom DiNapoli, demanding that New York State’s Common Retirement Fund divest from fossil fuels. DiNapoli has continued to insist that engagement is the way forward for the fund, but, clearly, many people disagree.

According to Richard Brooks, campaign coordinator at climate activist NGO, “The campaign in New York continues to sign up new sponsors [members of the legislature who support the act] of the Fossil Fuel Divestment Act with another assembly member coming on board last week,” he said, bringing the number of sponsors to 99.

More broadly across the US, says that “over 1,240 institutions representing over $14 trillion in assets have committed to some level of fossil fuel divestment”. 

But the level of that commitment is very varied.

To take one of the examples given, at Cornell University, also in New York, the university’s board of trustees voted in May this year to support a decision by its Investment Committee to institute a moratorium on new private investments focused on fossil fuels and to grow its investments in alternative energy technologies. This only applies to about 4% of the fund’s assets. However, the rest is indexed, which means that even though an ‘ESG investment policy’ is in place, it’s not having much effect. And this is despite all five of Cornell’s governance bodies – the Faculty Senate and the Employee, Graduate and Professional Student, Student and University assemblies – passing resolutions calling for the university to divest from fossil fuels.

Brooks at is still optimistic about the recent letter to DiNapoli and Cuomo. “Never give up hope, when it comes to New York State,” he replied. “I believe we are going to get there soon. The comptroller taking the first step by reviewing and then divesting from thermal coal companies (using a good 10% revenue threshold) was the door opening. With the financial arguments only getting stronger, I am expecting that we'll get more movement from him soon, or the legislature will act in early 2021.”

He noted that a lot of big endowments and pension funds had moved recently on divestment or net zero commitments, including, most recently, the UK’s Cambridge University which pledged, in October, to divest from fossil fuels by 2030 and for its investments to become carbon neutral by 2038. 

And, in May this year, the University of California system, the biggest in the US, announced that it had already divested itself of all fossil fuel holdings. New York State, while not committing to divest from all fossil fuels has, along with the Minnesota State Investment Board divested from thermal coal. 

As the database hosted by project Fossil Free shows, in the USA there are a lot of ‘coal only’ fossil fuel divestment pledges, even among the faith-based organisations that make up the majority of the pledgers. Cities are far more likely to pledge full divestment. But other US universities have made full divestment pledges such as Oregon State and Syracuse.

But what of Harvard's $42bn endowment, which endured divestment campaign after divestment campaign? 

Approached by RI, it was unable to field someone from either the university or the endowment manager, Harvard Management Company (HMC), to answer questions about what progress had been made. But divestment is not part of its strategy; at least not wholesale divestment.

And even its pledge to reach net zero by 2050 is beset by conditions, in much the same way that the oil companies RI recently wrote about will reduce their oil and gas production… as long as everyone else does or as long as something else out of their control happens.

This is what Harvard’s pledge says: “First, Harvard makes this pledge in support of the stated goals of the Paris Agreement with the expectation that governments will follow through on their own commitments to ensure these objectives are met [condition I]. Second, HMC will need to collaborate with a range of other institutional investors, asset managers, and corporations [condition II]. Third, and perhaps most important, a net-zero portfolio, no less a net-zero economy, will ultimately require important scientific advances and structural change in both the economy and consumer behavior [condition III].”

The pledge says its investment strategy “transcends the binary divestment debate by focusing on portfolio management—on both the supply and demand side of a fossil fuel-reliant economy”. But, HMC says it will work on the transparency of its portfolio and the measurement of its carbon footprint as it works through its five-year transition to external management. HMC will report annually on progress towards the net-zero commitment, with the first report to be released late this year. HMC will also develop specific, interim greenhouse gas emissions targets as “a path to ensure a net-zero portfolio by 2050”.

Going into more detail than the pledge itself, a press release announcing the commitment in April this year said: “The net-zero goal involves man-made greenhouse-gas emissions being cancelled out by efforts to remove them from the atmosphere.”

In a response to the faculty, Harvard President, Larry Bacow, said: “we believe that divestment paints with too broad a brush. We cannot risk alienating and demonizing possible partners, some of which have committed to transitioning to carbon neutrality and to funding research on alternative fuels and on strategies to decarbonize the economy.”

Well, yes. But why can the University of California divest without such alienation? How can the University of Cambridge commit without fear of demonising possible partners? I’m not coming down on either side here, just pointing out that the university’s portrayal of divestment does not accord with the experience of many other university endowments, city pension funds, institutions and other investors. 

And the pledge would sit better with me if the focus on engagement – the supposed saving grace of not divesting – occupied a more prominent place in HMC’s strategy. I don’t want it to seem like I’m picking on them – Harvard is not the only institutional endowment to have offered what some consider an inadequate response to the climate crisis – it’s just the biggest.

SEC Commissioner Allison Herren Lee and’s Bill McKibben have been announced as keynote speakers for RI Digital: USA 2020 on December 2-3. Free to attend.