College students fighting to get their schools to stop investing in fossil fuels have stumbled on a new idea that could bring fresh attention to their cause: Those investments might be illegal.
Students with the group Fossil Fuel Divest Harvard filed an official complaint with the Massachusetts attorney general’s office last Monday alleging that Harvard’s investments in oil, gas, and coal violate the Uniform Prudent Management of Institutional Funds Act, or UPMIFA, a state law that regulates how nonprofit institutions can spend their endowment funds. The move follows in the footsteps of Boston College students who filed a similar complaint with the attorney general’s office in December.
“Our hope is that attorney general Maura Healey, if she chooses to take action on this, will hold Harvard accountable for its dangerous fossil fuel investments,” said Sofia Andrade, a sophomore at Harvard and one of the organizers of Fossil Fuel Divest Harvard. “And our hope is that this sends a powerful signal to other institutions about what investments are acceptable.”
In the 56-page complaint, the students write that under UPMIFA, Harvard’s endowment managers are bound by three duties: to consider the “charitable purpose” of the institution in its investments, to invest with “prudence,” and to invest with “loyalty.”
They 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. They also write that Harvard’s fossil fuel investments threaten its own physical property by exacerbating flooding and sea-level rise.
Ted Hamilton is a Harvard alumnus and lawyer for the Climate Defense Project, a nonprofit that supports climate activists, who helped both the Harvard and Boston College students craft their complaints. He said another key claim in the complaint is that fossil fuel stocks have not only performed poorly in recent years but are also financially risky. The reserves of oil, gas, and coal these companies hold are what give them value, but if the world is going to avoid climate catastrophe, those reserves cannot be tapped and will become what are known as stranded assets. “So you’re not being a careful investor, you’re not acting prudently by betting that this sector is going to continue to be profitable, just because it has for decades,” Hamilton told Grist.
Harvard declined to comment on the complaint. Last year, the school announced it would begin transitioning its investment portfolio to “net-zero” greenhouse gas emissions by 2050, which would apply to all companies that Harvard invests in, rather than single out the producers of fossil fuels. There’s no agreed-upon definition for what net-zero means in the financial sector, and Harvard hasn’t yet landed on a methodology.
Harvard University President Laurence Bacow has emphasized that the school will engage with companies to reduce their emissions rather than divest from them. The school 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 percent of its portfolio at the end of 2020. Still, with an endowment of $41.9 billion, that’s around $838 million.
Hamilton said Harvard’s net-zero-by-2050 target is irrelevant to the idea that these investments are illegal today. “The legal violation is occurring now and needs to be cured now,” he said. “So many other universities have already demonstrated that it’s quite simple to divest from fossil fuels, that it’s not really acceptable for Harvard to keep delaying.”
The students’ complaint was signed by climate scientists, local elected officials, Harvard faculty and alumni, and more than two dozen environmental organizations. What happens next could have broad implications, since UPMIFA is a uniform law that every state in the U.S., except for Pennsylvania, has adopted.
“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,” said Ben Franta, a law and doctoral student at Stanford University and a Harvard alumnus.
When Franta was a PhD student at Harvard in 2014, he, along with Hamilton and a few others, attempted to directly sue Harvard for its investments in fossil fuels, arguing that they amounted to a mismanagement of charitable funds. The case was dismissed on the grounds that the plaintiffs’ status as students did not give them the standing to make such charges. But this new complaint puts all the evidence in the lap of someone who does have that standing — the attorney general.
Plus, it has the support of another important figure — Bevis Longstreth, a lawyer and former member of the Securities and Exchange Commission whose work helped inform the creation of UPMIFA in 2006. In fact, Longstreth is also the mastermind behind the students’ new strategy: About five years ago, he wrote up a legal memo arguing that divestment from fossil fuels could be justified by UPMIFA, and sent it around to several state attorneys general, asking them to issue official guidance on how endowment managers should handle the risks associated with these investments. None took up the issue. But Hamilton and his colleagues at the Climate Defense Project, who also saw the memo, did.
“This is exactly what I thought ought to happen, at least if the attorney general will do something about it,” said Longstreth. A representative for attorney general Maura Healey’s office told Grist it received the complaint and would review it but did not provide further details about its course of action.
“It doesn’t take a genius to know that the world of fossil fuels is dying,” said Longstreth, “and it’s dying very fast, and it’s stupid to wait around until it’s dead before you sell your securities.”