Fact of the Week: November 2020

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“The Endowment is Not the Issue”
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“The Endowment is Not the Issue”

“While the divestment groups have centered their most recent efforts on the abstract idea that “investments should reflect [Harvard’s] moral and political principles,” some of the campaigns have also argued that divestment will help change larger issues beyond the school. However, there is little evidence to support this claim. Research on the divestment movements’ impact on apartheid South Africa, one of the most public such campaigns in history, concluded that it had negligible impact on share prices themselves, though it may have contributed to the greater social pressure against the regime.”
Ryan Golemme, Harvard Political Review Staff Writer
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Frictional Costs of Fossil Fuel Divestment
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Frictional Costs of Fossil Fuel Divestment

“Fossil fuel divestment advocates are not unanimous with respect to identifying which assets should be divested, and there is no objective scorecard of which I am aware to determine this question. Further, as company policies and technologies evolve, the individual investments that comprise an appropriately divested portfolio will likely change. As a consequence, investment managers would need to undertake ongoing research and management costs to maintain compliance with divestment goals. This introduces a costly element of active management into endowment portfolios”.
Hendrik Bessembinder
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