While Harvard University rejects investments related to fossil fuels and is suffering in the current stock market, the University of Texas is continuing to lease its land for oil drilling, and its endowment could overtake Harvard’s.
Most elite universities grow their multibillion-dollar investment pools through stock market assets, private equity, and venture capital. At the end of fiscal year 2020, Harvard boasted a $41.9 billion endowment — the largest in the country — while the University of Texas followed in third place with a $30.5 billion endowment, according to data from the Department of Education.
Yet a plummeting stock market in the first half of 2021 may have poised the endowment of the University of Texas, which earns $6 million per day through its 2.1 million acres of oil fields in the Permian Basin, to become the nation’s largest as Harvard and other top schools take losses, according to data from Bloomberg. The University of Texas is enjoying record income from rising oil prices as hundreds of drilling companies, such as ConocoPhillips and Continental Resources, procure fossil fuels from its land.
At the end of last year, Harvard President Lawrence Bacow announced that the university would allow its remaining investments in the fossil fuel industry to expire while refusing to adopt new ones. The move came after aggressive campaigns from student activists.
“President Bacow’s language showed, however, that Harvard still remains afraid to fully sever ties with the fossil fuel industry,” an article from Divest Harvard claimed. “Never once has it used the word ‘divest,’ even as it is now making clear commitments to undertake the divestment process. That cowardice and its deadly consequences should not go unnoticed.”
More broadly, Harvard works to integrate Environmental, Social, and Governance (ESG) factors into its investment processes, according to Harvard Management Company, which has set the explicit goal of achieving a net zero emission portfolio by 2050.
Amid the most recent stock market downturn, however, ESG investments tended to suffer the most — especially through exposing themselves to the technology sector while continuing to scorn fossil fuel investments. Though technology companies are known for bankrolling social justice initiatives in reaction to national events like the death of George Floyd or the overturning of Roe v. Wade, they were also the first to lay off large portions of their staff as the stock market began its months-long tailspin.
For instance, iShares’ ESG Aware MSCI ETF — which has its largest holdings in companies like Microsoft, Tesla, and Google — is down over 14% since the beginning of 2022, slightly lower than the overall S&P 500 index. Meanwhile, iShares’ Global Energy ETF — dominated by oil and gas conglomerates like Exxon Mobil, Chevron, and Shell — has risen nearly 36% over the same time period.
While university endowments and leading asset managers continue to operate under the assumptions of ESG, an exclusive poll from The Daily Wire recently indicated that American investors prefer to keep profits and social activism apart from one another. While 29% of respondents agreed it is a “good thing” for companies to leverage their financial power for political or social means supported by executives, 58% — twice as many — said it is a “bad thing.”
Source: Dailywire
