In September, a report from non-profit group GRAIN detailing allegations of wrongdoing and lax oversight of Harvard Management Company’s farmland investments prompted a Bloomberg story read widely within and outside agricultural investment markets.
The revisitation of longstanding controversies discussed in the report came amid an effort by HMC’s chief investment officer – NP “Narv” Narvaker, hired in December 2016 – to move away from his predecessors’ strategy in managing the university’s $37.1 billion endowment.
Following the brouhaha, spokesman Patrick McKiernan wrote to Harvard’s student newspaper, The Crimson, explaining “the team has […] instituted a more proactive approach to working with managers of new and remaining assets – a partnership that provides more oversight and ensures that we can leave the land and community better than when we first invested”.
Asked by Agri Investor to describe this “more proactive approach” in greater detail, HMC declined to comment. Instead, the endowment shared an upcoming update to its natural-resource policy, an update McKiernan acknowledged was outdated due to its focus on timber investments, which HMC has largely exited.
When pressed to address substantive questions about the updated policy, McKiernan asserted: “The contents of the letter speak for itself.”
Unfortunately, the letter leaves much to be desired.
For example, the letter frames HMC’s efforts to ensure farmland investments adhere to stated principles in terms of goals it “aims to” achieve. It stresses the importance of efforts it does not explicitly say have been completed or even started. Its broad language leaves unclear what precise steps will be taken to address issues of indigenous rights and respecting existing cultural sites, or the degree to which anything within the document differs from current or past practice.
In addition, the letter contains typographical errors that distract from its message, including, somewhat symbolically, the misspelling of the word “sustainable” in its title. As wordsmiths, we understand that everybody makes mistakes. Still, such oversights do make it harder to accept the document as a credible response to the legitimate concerns raised in GRAIN’s report – especially since HMC, an endowment tied to one of the most storied academic institutions on Earth, has been working on this update since 2016, its spokesman told us.
Harvard can and should muster a stronger response to the issues raised by GRAIN because its own reputation is not all that is at stake. As managers active in the market tell Agri Investor, mainstream media coverage such as that generated by GRAIN’s report can absolutely be raised in investment-committee meetings.
The most impressive developing world farmland managers acknowledge they interact with legacies of colonialism. That unfortunate reality does not negate the logic, ethics or wisdom of investments in developing-world farmland. It does, however, contribute to a set of risks particular to the asset class that must be artfully managed, and which inevitably involve dealing with civil society.
Laudable though they are, Harvard’s “aims,” plans for “mechanisms that shall be employed” and descriptions to collegiate reporters of communities “better than when we first invested” do not illustrate the implementation of a proactive approach to managing risk.
That’s not to say HMC has not, in fact, implemented a state-of-the-art system of processes and due diligence to address every shortcoming highlighted in GRAIN’s report. We certainly hope it has. But HMC’s response to an earnest attempt to learn more about the program does not inspire confidence that the concerns of stakeholders on the ground are being considered sufficiently.
Optimistic managers may have hoped that an endowment with access to such a powerful resource as Harvard University could offer a stronger example of how to deal with complexities unique to this asset class, where even the best-managed developing-market projects face tangible reputational risk.
Agri Investor sure did.
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*Editors note: misspelling on “sustainable” was corrected on Oct. 25