Harvard University's $50.9 billion endowment continues to accelerate investments in climate transition, but as of June 30 still had double the exposure to fossil fuels due to returns on existing assets, said Harvard Management Co., the endowment's manager, in its third annual climate report issued Thursday.
As of June 30, the endowment's exposure to climate solutions approached 1% of endowment total assets, while its exposure to private equity funds focused on the exploration and development of fossil fuels accounted for more than 2% of endowment assets.
"The value of these investments changes over time due to contractual capital commitments, changing commodity prices, and the performance of the energy sector relative to other assets in the endowment," the report said. "On a net basis, the entire year-over-year increase in fossil fuel exposure is due to rising commodity prices. HMC expects its exposure to climate transition solutions to exceed exposure to fossil fuels in the coming years, as investment activity in climate transition ramps up and fossil fuel exposure winds down."
In September 2021, Harvard President Lawrence S. Bacow wrote in a Sept. 9 letter posted on the university's website that the endowment had "no direct investments in companies that explore for or develop further reserves of fossil fuels," and "does not intend to make such investments in the future." He also said that legacy fossil fuel investments through private equity partnership were in "runoff mode."
Also in the report, Harvard Management Co. said its facilities and operations achieved carbon-neutral status for the first time in the fiscal year ended June 30. HMC also said it is implementing a plan to calculate the baseline emissions associated with the endowment's overall portfolio, utilizing two undisclosed third-party providers to estimate those emissions, one focusing on private equity investments and the other on hedge fund investments.
Harvard was the first prominent university to make a net-zero commitment in April 2020.
The full climate report is available on Harvard Management's website.