Harvard Management Company Has Reduced Exposure to Fossil Fuels By 80 Percent Since 2008, Per Report


The Harvard Management Company has reduced its investments in fossil fuels by 80 percent since 2008 as it works to achieve net-zero greenhouse gas emissions associated with the University's endowment by 2050, according to a company report published Thursday.

“HMC has reduced its overall exposure to fossil fuels — including both direct commodity investments as well as indirect investments in companies that explore for or develop further reserves of fossil fuels held through dedicated externally managed funds — from approximately 11% of the portfolio at the end of fiscal year 2008 to less than 2% at the end of fiscal year 2020, a decrease of more than 80%,” the report reads.

In addition, HMC had no direct exposure to companies that “explore for or develop further reserves of fossil fuels” as of last June, per the report.

Following student and faculty pressure to divest the endowment from fossil fuels completely, University President Lawrence S. Bacow and the Harvard Corporation in April 2020 directed HMC to develop a plan for the endowment to achieve net-zero greenhouse gas emissions by 2050.


The report also outlines challenges HMC faces in understanding its ties to the fossil fuel industry. For example, many public and private market managers do not disclose the carbon emissions produced by companies in their portfolios.

As a result, HMC plans to conduct an assessment of its portfolio investments’ greenhouse gas emissions to develop a timeline to achieve an emissions-free portfolio. That assessment could take several years, according to the report.

“The timeline for when we will be able to do this will depend on how quickly our managers are willing and able to supply the necessary underlying data,” the report reads.

HMC also launched efforts to collaborate with other institutional investors to improve access to environmental data, per the report. HMC will engage with data providers to develop its own methodologies to evaluate the endowment’s environmental footprint.

“HMC has spoken with asset owners and asset managers that have made similar net-zero commitments, as well as potential service providers, to assist HMC in developing a process for creating a baseline carbon footprint of the endowment,” the report reads.

The report also references challenges of evaluating the environmental footprint of hedge funds, which often pursue investment strategies “uncorrelated to the broader markets.”

“No industry consensus currently exists on the best way to calculate the emissions of investments by these uncorrelated hedge fund strategies and existing protocols are expected to continue to evolve over time. HMC is studying the underlying logic of existing protocols and we will likely adapt these protocols for the purpose of our own unique reporting,” the report reads.

The report also provides an update on HMC’s involvement in several environmental initiatives and networks including Climate Action 100+, the United Nations-sponsored Principles for Responsible Investment, and the Task Force on Climate-Related Financial Disclosures.

Following Bacow’s directive to achieve net-zero emissions through the endowment by 2050, student activists called the plan “insufficient” because it still allows for some investment in fossil fuels. Some faculty who have advocated for divestment were similarly skeptical of the plan.

In Thursday’s report, HMC defended its policy of collaborating with greenhouse-gas-emitting companies on environmental and clean energy initiatives.

“Engagement may directly lead to a company’s changing its behavior and is a powerful tool for investors to achieve real world impact,” the report reads. “It is the mechanism through which the impact on real world emissions is most likely to materialize.”

HMC will update the University’s leadership on its progress “on a regular basis” and will update Harvard affiliates annually, per the report.

—Staff writer Virginia L. Ma can be reached at

—Staff writer Kevin A. Simauchi can be reached at Follow him on Twitter @Simauchi