Conversion: Harvard’s Endowment Shows Why Fossil‑Free Is Only the Beginning

The Governance Bubble… at Harvard – and Music for a Democratic Corporate Governance

What I did not fully appreciate in 2013 was how dramatically endowment structures themselves would evolve — and how that evolution would complicate the meaning of divestment. Back then, I argued that “it would be foolish for any endowment to hold assets in the dirtiest companies,” and that Harvard’s sustainability rhetoric was undermined by investments that “send the opposite message.” Today, the challenge is no longer simply whether Harvard holds fossil-fuel stocks. It is whether Harvard can make any credible ethical commitment at all when its endowment is routed through layers of external managers, offshore vehicles, feeder funds, and private partnerships that obscure what the University actually owns.

The Crimson’s recent reporting, Oil, Lawsuits, AI: Inside Harvard’s Increasingly Opaque $57 Billion Endowment, makes clear that Harvard’s endowment has become a case study in values-washing through complexity. (Thanks to Aryt Alasti for sending me a copy and for his guest post, My Years Inside the Harvard Divestment Fight) The Crimson article traced nearly 3,400 tax records across a decade of filings and found, among other things, that Harvard now owns roughly 60 percent of Aventail Energy Fund LP — a vehicle holding $493 million in assets that channels capital into an offshore oil producer. That’s five years after Harvard pledged, in September 2021, to stop making new direct investments in companies that explore for or develop fossil fuel reserves and to let its legacy private-equity fossil holdings run off. The pledge held for direct holdings. It says nothing about what happens when Harvard sits on the other side of a majority-owned fund. The University can maintain that posture while championing sustainability and investing in litigation-finance pools, catastrophe-risk bets, and private companies whose operations contradict Harvard’s public commitments.

This is not merely a failure of ESG integration — it is a failure of honesty and disclosure. When a world-leading institution embraces sustainability rhetorically while its money quietly flows into the harms it professes to oppose, it teaches other institutions that commitments are malleable if the structure is complex enough.

Harvard’s Endowment: Transparency Needed

This is precisely the governance problem I gestured toward in 2013 when I urged Harvard to adopt “more democratically governed endowments” and to take responsibility for its “controlling stakes in the billions of dollars of equity they have in various alternative investment funds and private companies.” The students who pushed for fossil-free investing were right — but they were also pointing to something larger: the need for transparency, accountability, and democratic oversight across all asset classes. Divestment was never just about carbon; it was about aligning institutional behavior with institutional mission. Harvard’s current opacity shows how easily that alignment can be lost.

Thirteen years later, the lesson is clear. Fossil-free endowments were a necessary first step, but they are insufficient without governance reforms that prevent value-washing through intermediated investment structures. If Harvard wants to set an example worthy of its influence, it must embrace full disclosure of indirect holdings, adopt governance mechanisms that bind its investment practices to its public commitments, and ensure that sustainability is not merely a press-release posture. The carbon bubble I wrote about in 2013 has now been joined by a governance bubble — the belief that opacity is acceptable for institutions that claim moral leadership. Harvard can still lead, but only if it chooses transparency over convenience and integrity over complexity.

Thanks to Bob Monks, Fair Harvard and Aryt Alasti

Thanks to the late Bob Monks for flying me out to Boston in 2013 to talk with students who raised the Fair Harvard Fund — the “monetary petition” the Responsible Investment at Harvard Coalition used to pressure the University into creating a Social Choice Fund for donors — and for introducing me to the divestment movement more broadly. And thanks to Aryt Alasti, a Harvard security guard and longtime Divest Harvard and Responsible Investment at Harvard affiliate, for keeping in touch with me all these years later on continuing developments — a reminder that this campaign has always been carried as much by campus workers as by students and alumni. I will always treasure both friendships. Next up is a guest post from Aryt Alasti. Yes, I use AI and social media.

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