20 Pages Posted: 4 Sep 2015
Date Written: September 3, 2015
Many university endowments and other public funds are considering divesting all companies in business “related to fossil fuels.” In this paper, I estimate the specific costs of doing so for five university endowments: Harvard, Yale, MIT, Columbia and NYU. Because none of the universities disclose their holding on a security by security basis, I constructed proxies for their holdings using mutual funds. I then examine the costs, on both a gross and a risk adjusted basis, of divesting the proxies of holdings of fossil fuel companies. The losses are not insignificant – exceeding $100 million per year for Harvard the university with the largest endowment.
Keywords: Investment Divestment
JEL Classification: G12
Suggested Citation: Suggested Citation
Cornell, Bradford, The Divestment Penalty: Estimating the Costs of Fossil Fuel Divestment to Select University Endowments (September 3, 2015). Available at SSRN: https://ssrn.com/abstract=2655603 or http://dx.doi.org/10.2139/ssrn.2655603