Harvard students pushing the institution to divest from fossil fuels may have found a winning strategy with the new legal argument that investing in Big Oil violates Massachusetts state law. All they need is now for their state’s attorney general to take up their cause.
Five years ago, Bevis Longstreth, a lawyer and former member of the U.S. Securities and Exchange Commission, composed a legal memo pointing out that fossil fuel divestment could be justified under the Uniform Prudent Management of Institutional Funds Act (UPMIFA), “a state law that regulates how non-profit institutions can spend their endowment funds,” writes Grist.
With the help of Harvard alumnus and Climate Defense Project lawyer Ted Hamilton, a student group called Fossil Fuel Divest Harvard set out to test Longstreth’s theory, filing a 56-page complaint with state Attorney General Maura Healey arguing that their university’s investments in coal, oil, and gas violate the terms of UPMIFA.
In their complaint, the student activists observe that Harvard’s endowment managers are bound under UPMIIFA to three duties: “to consider the ‘charitable purpose’ of the institution in its investments, to invest with ‘prudence’, and to invest with ‘loyalty’.”
Hamilton and the students are arguing that their university’s investment in fossil fuels is decidedly imprudent, likely to prove financially disastrous in the very near term as fossil assets are increasingly stranded. Then there are the clear and present dangers that flooding and sea level rise pose to Harvard’s own campus.
As for charity and loyalty, the students “allege that by investing in industries that have led disinformation campaigns about climate change, lobbied against climate action, and sold products that threaten the prospects for ‘a more just, fair, and promising world’—as is written in Harvard’s mission statement—the school is undermining its own students’ and faculty’s work toward a sustainable future.”
To date, Harvard has resisted calls to divest, notes Grist—last year, the school announced it would push for net-zero emissions across its portfolio by 2050, rather than give fossils the boot.
This amounts to a rather hazy pledge, writes Grist, since “there’s no agreed-upon definition for what net-zero means in the financial sector.” And in any case, “Harvard hasn’t yet landed on a methodology.”
As for how exposed Harvard is to Big Oil, the institution “recently disclosed that it has no direct holdings in companies that explore for or develop fossil fuels, and that its exposure to fossil fuels through indirect investments, based on available data, made up less than 2% of its portfolio at the end of 2020.”
Still, observes Grist, “with an endowment of US$41.9 billion, that’s around $838 million.”
To Ben Franta, the entry of the state’s attorney general into the fight would be game-changing. Franta, a doctoral law student at Stanford and Harvard alumnus, saw his own 2014 effort to sue the university for its fossil investments come to naught when the court ruled that students lacked the standing to launch such a claim.
“An investigation or any sort of action on this by the attorney general of Massachusetts has the potential to help shape climate investment law, for lack of a better term, across the entire country,” he told Grist. That’s because UPMIFA is a uniform law that has been adopted by 49 of 50 states—all but Pennsylvania.
The would-be plaintiffs are now waiting to hear if Healey will take up their case. Grist says a representative from the attorney general’s office confirmed receipt of the complaint but declined comment.
For Longstreth, the prudent course of action is obvious. “It doesn’t take a genius to know that the world of fossil fuels is dying, and it’s dying very fast, and it’s stupid to wait around until it’s dead before you sell your securities,” he told Grist.