Harvard Management Company Eschews Fossil Fuel Investments

Head of natural resources says endowment is pausing investments in minerals, oil, and gas.

Harvard Management Company’s head of natural resources said the university’s $35.7 billion endowment is “pausing” investments in some natural resources, such as fossil fuels.

“Never say never—but I doubt that we would ever make a direct investment with fossil fuels,” Colin Butterfield, managing director of natural resources for Harvard Management Company, said at a Harvard Business School event, according to The Harvard Crimson. “For now, we are pausing minerals and oil and gas,” he added.

In November, Bloomberg News reported that Harvard was seeking to sell natural resources assets after the portfolio lost more than 10% last year. The university was looking to restructure the $4 billion of holdings to free up cash for other investments, according to the report.

As a signatory to the United Nations-supported Principles for Responsible Investment (PRI), the Harvard endowment is required to complete the PRI’s mandatory reporting framework on an annual basis.

Butterfield joined Harvard Management Company in August. He was most recently CEO of Radar SA, a $2.2 billion Brazilian farmland investment management joint venture between retirement money manager TIAA and Cosan SA.

According to Harvard Management Company’s most recent annual report, investments in natural resources firms comprise 10% of the endowment’s portfolio. And in 2016, the endowment’s natural resources investments declined 10.2%, which was well off the benchmark gain of 1.4%, and was the university’s biggest underperformer for the year. However, the university said it is “optimistic we can improve performance in this asset class going forward” under the stewardship of Butterfield.

At the Harvard Business School event, The Crimson reported that Butterfield said climate change is “a huge problem,” and that it is something he actively considers in regard to his role leading HMC’s natural resources investments.

“I clearly feel that we are stealing from the future generations,” Butterfield said. “When you go out there and invest in natural resources, and you start looking at what’s happening in the world of natural resources, it’s pretty scary—we need to have more of these conversations.”

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