Kathryn “Kat” Taylor has resigned as a member of Harvard’s Board of Overseers to protest the university’s failure to address what she said are unethical investments, particularly in fossil fuel companies, by its $37.1 billion endowment.
“After six years of Harvard’s inaction during my tenure, and many more that preceded my participation as an Overseer, I am today speaking publicly about our failure to act,” Taylor wrote in her resignation letter, which she submitted one day before the end of her six-year term.
“We have neither a moral nor a financial narrative to stand behind,” she said, adding that “Harvard’s endowment has severely underperformed financially compared to its peers, even as we have continued to invest in activities and products that undermine the well-being of our communities, nation, and planet.”
Taylor is the cofounder and CEO of California-based Beneficial State Bank, a community development bank, and in 2012 was elected to the Board of Overseers, Harvard’s second-highest governing body. Prior to her resignation, Taylor publicly announced her concerns over the endowment’s investments in a March 28 op-ed piece in The Harvard Crimson, as she called on Harvard Management Company (HMC) to divest from fossils fuels.
“We should and would be horrified to find out that Harvard investments are actually funding some of the pernicious activities against which our standout academic leadership rails,” she wrote. “Ethical investment standards run to the core of our responsibility.”
She said that her concerns pertain to the potential presence in the endowment of “fossil fuel reserves we can never afford to burn, land purchases that may not respect indigenous rights, water holdings that threaten the human right to water, and investments at odds with the safety of children and first responders.”
In response to her resignation, Harvard University said it agreed that climate change is an urgent issue, but “we respectfully disagree on the means by which a university should confront it.”
HMC, the investment arm of the university, declined to comment on Taylor’s accusations, but said it has a sustainable investment policy that integrates environmental, social, and corporate governance (ESG) factors into investments. However, divestment, as Taylor has sought, is something HMC tends to avoid.
“The University maintains a strong presumption against divesting investment assets for reasons unrelated to the endowment’s financial strength and its capacity to further Harvard’s academic goals,” HMC states in its sustainable investment policy. “Harvard conceives of the endowment fundamentally as an economic resource, not as a lever to advance political positions or to exert economic pressure for social purposes.”
However, HMC said there are “very rare occasions” when companies’ activities are so “repugnant and ethically unjustifiable” that it calls for the university’s dissociation from those activities. HMC said such ethical considerations have led it to not own shares in “certain companies involved in the perpetuation of apartheid in South Africa, in the manufacture of tobacco products, and in enabling genocide in Darfur.”
Taylor also criticized the lack of transparency with HMC’s investments, saying “we don’t know what we don’t know, especially now that so much of the endowment is held in opaque funds.”
She said she has tried to “work behind the scenes,” including meeting with student and faculty groups, and consulting with university officials. But her “soft power approach” was to no avail, she said.
“Harvard may have already lost its great opportunity to lead, but it has not lost its responsibility to act and cannot indefinitely avoid taking up this issue,” she wrote, adding that because of Harvard’s dominant influence among world universities, a commitment to ethical standards “would likely open a floodgate of similarly principled decisions that truly move markets, policy, hearts, and minds.”