Harvard farmland acquisitions criticized as unethical

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A new report accuses Harvard University’s endowment of contributing to “environmental destruction,” and the displacement and harassment of communities in its pursuit to acquire $1 billion worth of farmland worldwide over the past decade. (Photo: Wall Street Journal)
Chief Investment Officer | 14 September 2018

Harvard farmland acquisitions criticized as unethical
 
Report says endowment’s $1 billion global land grab has displaced communities and hurt the environment.
 
A new report accuses Harvard University’s endowment of contributing to “environmental destruction,” and the displacement and harassment of communities in its pursuit to acquire $1 billion worth of farmland worldwide over the past decade.
 
Barcelona, Spain-based GRAIN, and the Sao Paulo, Brazil-based Network for Social Justice and Human Rights, estimated that Harvard Management Co., which manages the university’s $37.1 billion endowment, has spent approximately $1 billion over the span of more than a decade to acquire approximately 850,000 hectares of farmland around the world.
 
The report said the “opaque” acquisitions “were undertaken without proper due diligence and have contributed to the displacement and harassment of traditional communities, environmental destruction, and conflicts over water.”
 
The groups say Harvard’s farmland acquisitions were channeled through complex company structures, making it difficult to determine its specific farmland holdings. They maintain that atop each farmland investment structure is one of Harvard’s tax-exempt subsidiaries that manage different parts of the endowment’s investments, which include Blue Marble Holdings, Phemus Corp., Demeter Holdings Corp., and Harvard Private Capital Realty.
 
The report cited tax filings of the Boston-based subsidiaries that it said indicate Harvard channeled money for farmland investment through these companies to other subsidiaries registered in tax havens such as Delaware or the Cayman Islands, under “obscure” names like Guara LLC or Granary Investments.
 
“From these tax haven companies, the money then flowed to subsidiaries in the target countries, which are managed by various local operators active in agribusiness and land acquisitions,” said the report. “These local business groups identified the lands, made the purchases, and managed the farms. Harvard paid them millions of US dollars in fees for their services.”
 
The report said Harvard’s involvement in acquiring and industrializing farmlands in developing countries has resulted in cutting local villagers off from land they had farmed for generations, while also creating environmental and health problems in communities caused by pesticides that were aerially sprayed onto the farms.
 
While Harvard Management Co. didn’t directly address the report, it said that it is currently repositioning its natural resources portfolio as part of an investment management restructuring announced last year, and in the future will no longer be directly invested in natural resources. However, that transition will take some time due to the illiquid nature of the holdings.
 
“The current natural resources team at HMC has made great progress in their multi-year repositioning of the portfolio,” said Harvard Management Co. in a statement. “Their aim is to create a more focused and efficient portfolio that, in partnership with local managers, can meet or exceed our quality standards.”
 
The management firm also said that as a result of the repositioning, it has sold a number of assets and is considering divestment from others.
 
“The team has also instituted a more proactive approach to working with managers of new and remaining assets,” said the firm. “A partnership that provides more oversight and ensures that we can leave the land and community better than when we first invested.”
 
Tags: endowment, Harvard Management Company, Natural Resources
 
By Michael Katz
Original source: Chief Investment Officer
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