The Harvard University endowment, which has pledged to move its portfolio to net-zero carbon emissions by 2050 issued a progress report this month. The verdict: Movement is slow, but the fund can record some headway.
The Harvard Management Company (assets under management as of mid-2022: $51 billion) takes credit for being the first endowment to make the pledge, in 2020.
In an interview with a university publication, Michael Cappucci, the managing director for compliance and sustainable investing for the endowment, said, “It is still early, but we’re off to a good start.”
In the near term, Cappucci said, HMC achieved the goal in its own operations in fiscal 2022. Sure, a university endowment is not a smokestack industry. Still, the fund has heating and cooling equipment, information technology services, business travel and commuting, which do consume carbon-based energy.
It has found “opportunities within office infrastructure to increase efficiencies,” the report stated. HMC was carbon neutral for the first time in its facilities and operations in fiscal year 2022, the report stated. The endowment’s operations put out 1,864 tons of carbon emissions in 2022, although pandemic-related reductions in commuting and travel are “not expected to be a representative baseline” for future years. The report noted that the endowment is separate from the university, but that Harvard as a whole is also improving its carbon situation, having started in 2006.
HMC is one of several endowments to press for the net-zero objective. Others include the University of Michigan, Northwestern University and Princeton University.
The main focus of HMC’s effort is in its investment portfolio. By next year, the fund expects to have settled on a “baseline assessment,” measuring where it is and how to get where it wants to go. Then, the report said, HMC will “have a clearer sense of timing.”
Meanwhile, HMC is concentrating on its hedge fund and private equity investments, as well as its own direct holdings. Harvard’s directly owned securities have no fossil fuel exposure, and the fund makes no “new investments” in PE programs that explore for and develop carbon-based fuels: oil, natural gas and coal. Some of its PE and hedge funds contain previous investments in carbon fuels. Harvard will gradually get rid of these funds. The carbon investments make up 2% of the portfolio, the report found.
The Harvard fund is a signatory of the Glasgow Financial Alliance for Net Zero, a consortium of institutional investors sharing the goal of decarbonization, allowing HMC to share information and strategy more easily with others.
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Tags: 2050, carbon neutral, Glasgow Financial Alliance for Net Zero, Harvard Management Company, Michael Cappucci, Net Zero