The Harvard Management Company, which manages the university's $50.7 billion endowment, said the endowment's investments in fossil fuels are on pace to decline by 2. reported to be below %.
Latest details of the university's 2020 commitment to achieving net-zero emissions and fossil fuel divestment targets for the endowment by 2050 were reported by HMC on Wednesday as part of its annual climate report. Ta.
“HMC's remaining exposure to private equity funds focused on fossil fuel exploration and development represents less than 2% of the fund, reduced from 2022,” the report said. “As expected, the fund's climate exposure is outpacing its fossil fuel investments in the coming years.”
In response to both public and student pressure for the university to fully divest from the fossil fuel industry, then-Harvard University President Lawrence S. Bacow developed a plan to achieve net-zero emissions by 2050. Directed HMC to address its relationship with the fossil fuel industry. .
Current fossil fuel holdings are what Bacow called the fund's “legacy investments,” meaning HMC has avoided direct exposure to fossil fuels when investing in new private equity funds. It means that.
Harvard University's fossil fuel investments currently amount to about $1 billion.
Since then, HMC has adopted a “thematic strategy” to generate endowment returns by investing in technologies that accelerate the low-carbon transition. In addition to directly reducing emissions, the strategy also includes investments in climate action, which amount to more than 1% of his endowment.
HMC's climate change-focused investments are primarily made through venture capital and asset management companies. In their report, they cited the Breakthrough Energy and Eclipse frameworks as exemplary leaders in climate-smart investing.
“HMC is optimistic that these investments in climate action will help drive sustainable development and job growth while generating competitive financial returns,” the report reads. has been written.
According to the report, HMC is currently developing a framework to accurately assess the endowment's emissions, but has faced challenges in calculating climate statistics for the portion of the endowment that is outsourced to external managers. It is said that there is.
Hedge funds represent the second largest asset class in HMC's portfolio, accounting for 31% of the portfolio. Assessing hedge funds' carbon emissions remains the “most challenging” part of Harvard's ongoing efforts to document its entire endowment portfolio, the report said.
While many asset owners making net-zero commitments simply exclude hedge funds from their emissions analysis, HMC is working with a third-party service provider to pilot a custom hedge fund carbon emissions report. It is in operation.
Over the next year, HMC has committed to improving access to climate-related data from external managers, establishing baseline measurements for its portfolio, and identifying short-term reduction targets.
“HMC recognizes the critical need to develop and disclose interim targets and progress towards achieving them to ensure accountability and transparency,” the report states. .
While HMC is committed to delivering on its net zero commitments with its fund and portfolio managers, it is also committed to maintaining its internal operations to carbon neutral standards.
2023 marks the second year in a row that HMC operations are carbon neutral and its services align with the university's climate change efforts.
—Staff writer Sidney K. Lee can be reached at sidney.lee@thecrimson.com. Follow her on Twitter @sidneyklee.
—Staff writer Thomas J. Mete can be reached at thomas.mete@thecrimson.com. Follow him on Twitter @thomasjmete.
