Sustainable Investments Task Force
11/12/13 Meeting Minutes
Task force members in attendance were: Jim Chambers (Chair) (by phone), Mara Donaldson, Michelle Fisher, Michael Fratantuono, Steve Hietsch, Will Kochtitzky, Adam Laird, Neil Leary
Absent were: Margaret Lindsay (Co-chair)
Chair Jim Chambers called the meeting to order at 10:35 a.m. He began with the announcement Will drafted. There were a few changes made and he asked if there are any other comments on the draft. Adam explained the changes were made because he felt they needed to bring the mission of the college in so everyone knows the committee is keeping the mission at the forefront of their minds. The draft was approved and Steve will send the announcement to Connie so she can have the email sent out. Jim thanked Adam for drafting it.
Jim turned the meeting over to Neil to give some information on what the IPCC is and what they do. The Inter-Governmental Panel on Climate Change was formed by the United Nations in 1988 to comprehensively assess scientific literature on climate change. They go through peer review publications and assess and synthesize those and come to conclusions to say what we do and do not know about climate change. Every five to six years they do a major comprehensive report. The first volume covers the physical science of climate change; the second will look at the impacts of climate change and the third is about policy responses. It is a report from scientists who were nominated by their national governments. There are about 30 different countries included. One of the key questions the IPCC is asked to look at is if the earth’s climate has changed and are humans a part of that change. Their findings on that start with a very conservative outlook in 1990…moving forward they became stronger in that conclusion each time a new report was issued. In the September 2013 report it shows the probability is 95% or higher. Jim asked if their mission is research driven; presenting the facts as they find them and making policy recommendations. Neil said they do not make policy recommendations. They do science assessment that is policy relevant but not policy restrictive. They will present information such as: if action X is taken what might the consequences be or if you fail to do action Y what might the consequences be. They do not make policy recommendations because the governments that formed the IPCC would take it away. There is a completely different process by which governments are making their own judgments about policy and do not want to set up a UN body to tell them what policy should be.
The committee moved to discuss some of the topics presented in past meetings that may have a bearing on what the recommendations might be from the committee. The first topic was the Green Revolving Loan Fund. Jim opened the discussion on that topic so the group can begin to formulate a position on it. Adam asked for a restatement of what it is, how it would produce revenue and who would be in control of it. Steve said it would not produce revenue, but it would produce savings. The theory behind it is we would invest in capital improvements on campus, see savings from utility expenses, and rather than use those savings to finance something else we would take those savings and invest them in additional capital improvements on campus that would further reduce our utility expenditures and our greenhouse gas emissions. It is not only a way to save money; it is also a way to meet our climate commitment. It is believed it will get us to the 25% reduction in emissions by the year 2020. It would be managed by the Finance and Administration division; both on the finance side and the facilities management side. He said there is a question on how to measure the savings to verify if they have really been achieved. Another question is whether there is any upfront funding needed and where it will come from. We are still working on that.
Discussion moved to questions about the LUCID software program. Neil said that should be happening. He understands that within the Facilities budget there is a $75K budget line for the CAP. Ken is planning to use part of the $75K for the LUCID program. It would begin with the first year residence halls and would be expanded to other buildings over time. There is a one-time cost for the program and there are meters needed in each building. Will said he understands most of the buildings are set up for the meters. He said Phillips has a program also. The LUCID software has a couple additional features such as the capability to send emails when a spike in usage is detected. He thinks Ken is trying to make the decision between the two programs and it may be in place next semester. Mike said it is hard to do the accounting to know the savings that are being realized in sustainability measures. In IB&M we have a woman, Joy Midow, who is going to develop a cost accounting course that links to how this would account for savings in sustainability initiatives. He said this is a relatively new discipline that has some challenges, but it has interesting ways forward.
Will said he is excited about the loan fund and does not see how we can meet our carbon goals without doing it. His only concern is calling it a Green Revolving Loan Fund. He feels the Green does not do it justice and does not communicate what it is. Mike asked if it is purely a carbon reduction objective. Neil said that is how they have been thinking about it. Will said Reinvest Dickinson has been calling it a Sustainability Revolving Loan Fund in the hopes it will catch on. Mara defended the use of “green”. She said it has a double meaning for this kind of project…green for sustainability and green for money. You get multiple dimensions and clearly identifies for this community. It also links to other greens such as “green devil”, etc. She is not troubled by using green. Neil said he does not feel they need to resolve that now. The committee agreed the fund is a good idea. The only question is where the initial funding will come from. Steve said it may be minimal if they sequence the projects properly. Neil feels it is good that the committee endorses the idea of the Green Revolving Loan Fund. We can just say it looks like a really valuable tool for reaching our climate commitment. Jim said he would like to have the task force give a strong endorsement to show they are behind the fund. The committee agreed with no objections. Steve said he thinks it will be discussed at the board of trustees meetings in January and approved at the May 2014 meeting as part of the FY15 budget.
Jim moved on to discuss the position that they may want to take about increasing our sustainable investment commitment. To begin Steve filled the committee in on the move the Rockefeller Brothers Fund has made to leave Investure. They are heavily invested in the Investure sustainability fund and are looking to sell those investments. They are looking first to members of the Investure Consortium to see if they want to purchase any of the investments. Middlebury has already offered to purchase some of the investments to up their sustainability investments. Investure has asked Dickinson if they are interested as well. It is possible we may be able to purchase them at a discount. Mara said she feels the committee needs more information on what a sustainable investment is. Michelle asked how Investure identifies a sustainable investment. Steve said they are using standard industry codes to identify companies that are engaged in renewable energy. Jim said the concept of increasing our commitment is the Investment Committee’s task. He feels our recommendation should be an emphasis on sustainable investments where it meets our portfolio requirements and hope that they meet and act on it. The mechanics of upping our investment is the work of the Investment Committee. Mara said she is comfortable with that but would like to review it and go back in terms of the standard industry guidelines for what counts. She is concerned that sometimes what looks like a sustainable investment is at the cost of some other kinds of issues. Are these standard industry guidelines focused on just the reduction of emissions and the kind of things we have been talking about or about fair wage, fair working conditions, etc? Steve said we are invested in the ESG fund where we are not just getting environmental issues but governance issues and social issues. The question is if that is not renewable energy is that something we want to count. Mike said he believes Investure is committed to talking about a new methodology for discussion about sustainability. He wonders if that covers environmental, social and economic sustainability type outcomes. Is there a sense in Investure’s evolution that we are a lead prodder in the way they are rethinking things? Are we one of the lead voices in asking Investure to re-conceptualize and develop a new methodology? Jim said he thinks we are probably asking the most questions along with Middlebury. Neil said if we have a policy statement of what we want to be doing going forward we should be stating part of our intention is that we want to be a leader and engage Investure and the other clients in these discussions.
Will said his only concern is that on increasing the sustainable investments that we could be green-washing or saying that these are meeting top industry sustainability standards. We need to make sure they are sustainable and we are not saying one thing and doing another. He said he has confidence in Investure.
Mara said if we make the proposal that we want to be a leader in this conversation that is one of the issues. If we are a leader and we are on top of that and want to position ourselves that way we can have those conversations in a very constructive way. Investure is very supportive thinking about these issues and never compromising the reality that these investments need to make money. Jim said the theme of taking a leadership role is something we should build on. He had been thinking more along the lines of an exchange of ideas on sustainability on some basis. We hear from them more on an on-going basis about the investments they are looking at and acting upon and that they hear from us on what are emerging ideas that people might think are good. In terms of positioning that will get us much further than a kind of an honest approach to what they are doing. We heard from Alice and he believes in their sincerity and the Investment Committee is sensitive to the credibility of Investure. He wants to keep taking it on the positive and is concerned about the green-washing because that will shut our audiences down. Will said he is not saying they are green-washing but remains skeptical and hopes we are not and do not. He is not going to tell anyone that we are or that we will. Mara asked if there are other models or precedents within Investure or other kinds of groups like them where the members meet outside of Investure. She wondered if that would be considered a threat to them. Steve said they talk to each other.
Mara said she means at this level like an open conversation with other schools in the consortium on these kinds of questions, outside of Investure. Steve said the clients do get together twice a year in early June and in the fall. In the past Investure has left the room to allow the clients to talk together about issues.
Adam said he has been thinking about how we can really address the green-washing issue. He feels we can put up as much on sustainability as we want and it is amazing that we can say we are so green. The most important thing is that we also put up the places where we are failing. So people know that as an institution we are self-aware of these problems and what we are doing to fix them. Being institutionally aware of the problems is the only way we are going to solve them. When Dana Scaduto attended one of our meetings and mentioned we are #2 and how proud we should be about that, it is almost like we have green-washed ourselves. We have to be constantly aware of the critical changes that need to be made to still improve. We need a way to check ourselves. Neil said we also need to recognize this is not a one-time decision process. This will constantly evolve through these conversations. What are we comfortable with? Are we comfortable being invested in companies that include fossil energy along with renewable? It may be acceptable in this current point in time. This is an evolving conversation about where we want to be invested is going to change. Green washing is a very subjective term. One defense against it is to say we are constantly, critically questioning what we are doing, where we are, where we want to go. There is no way to be invested in the free market economy and be purely green. You also cannot keep an endowment going. There is some degree of not being green that we are going to need to live with. It will shift over time.
Mara asked if the marketing message is: come to Dickinson because we have what you want; or is it come to Dickinson, we have these two great competencies (global and sustainable) and join the conversation as we continue. Adam said there is a lot of “look at what we have done” and he would like to have it be “look at what we are doing” in regards to sustainability. Mara said she would like it to be look at the commitment we have made to this great and urgent issue and come join the conversation because it is real and urgent. Will said he looked at it that way when he was looking at schools. Jim said it reinforces for him our position in sustainability and there really is great stuff going on. Whether it is attracting students or helping the college run more efficiently, this is a great message. One thing we want to say is that we need to constantly recognize our differentiating position in sustainability and task the committee, the administration and the board to continue to keep an emphasis on that. Mara said she agrees the energy she is feeling now in the comments is that part of the differentiation means the kinds of things that attracted Will to coming here are being communicated. It is not just engaging the world it is being part of change that is happening because we made a commitment to really important things. These changes have to be made and make a difference. There is some real urgency and you are part of something greater than yourselves.
Will said he would like to shift gears and talk about some other things. At their last meeting the Reinvest Dickinson group talked about charging students a Green Fee on their tuition that would go toward carbon reduction projects. They, as a group, did feel it was a good idea and would be for it. They did not feel it was a good idea to advocate for the fee because they think the others already think sustainability is being pushed down their throats. It would get more negative pushback than it would bring positive change. Another thing he feels they can do is look at SERIES. He does not know a lot about them. It is a group that somehow falls under the United Nations. He thinks it could be something the college joins or encourage Investure to join. We maybe should make this part of our final recommendations. Jim asked how Will proposes to look into this. Will said he could research it and maybe talk to Swarthmore who he thinks may have joined this. He said it was not a student concern at Swarthmore but an administrative move. He does not feel like joining it is a huge deal but that Investure should know about it and know this is another source. Mara returned to the Green Fee subject and does not feel that is a good way to go. She is not sure if the task force needs to bring it up. Neil said he thinks it should come from the students and the group who brought it up does not want to propose it. It was agreed the task force would be silent on this subject and use our power on the Green Revolving Fund.
Basic tenets of recommendations:
Neil feels a proposal should be put forth to the Investment Committee about what Dickinson’s position is on socially responsible investing, sustainable investment, what do those terms mean and the commitment to what we are going to be doing over time. We should draft some language for those kinds of things so we have some guidance and a set of principles. It should be done in a very sort of abstract level, not micro managing, but a broad statement of principles to guide us in the future. Now we have things posted on our website but it does not tell the reader what they mean. He thinks we need to define some things better. Neil said he would look for examples out in the rest of higher-ed and craft some language to bring back to the committee. Mara asked Mike if the SRIC had any principles they worked by. Mike said it was a conversation committee and there were no recommendations to the board of trustees that he can recall. Neil said on the website there is some language about what socially responsible investment means but the Investment Committee is not required to be guided by it.
Jim said the broader definition of socially responsible investing is daunting to him and we could go down many paths that require significant discussion. He agrees with the desire to have that in front of the Investment Committee and would probably be inclined to say we feel like there is a gap in the definition of socially responsible investing and what the tenets are for Dickinson. Neil suggested we propose this is an area we need some policy guidance on and is something that needs to be addressed outside this task force. Mara said she thinks it is an excellent idea as we do not want to divert the mission of our task force. But this issue about socially responsible investing principles has been an ongoing issue here and it would not take very long to document a couple of times in the history of the college where this issue has come up and resurrect it. She is very comfortable making a statement as Neil has said. Adam asked who would have the authority to put that into language for the college. Mara said in the apartheid model it was Michael Brittain, the Treasurer and the Investment Committee of the board of trustees. Mike said regarding the SRIC there were originally concerns from students at which time, Annette Parker, with the endorsement of Bill Durden, began to have a discussion on the subject. As time unfolded the group looked at different things that Dickinson was doing. By that time the college had moved to Investure and did not have total flexibility then either. The group decided they were doing the best they could. Jim said it would definitely need to be done under the Investment Committee. Mara and Neil feel the task force should make a recommendation to the Investment Committee that it needs to be looked at. Jim said as more guidelines come up for investment we are going to come up against some of the issues we have learned about. One being, as Dana said, we will have legal issues in excluding certain investment classes. We believe in all this social action but that should happen within the administration and the actions of the college. He supports putting in the language saying we would like further vehicle for Dickinson to form and articulate this further. We could try to have the Investment Committee make that happen. He asked Steve if he thought the Investment Committee would be the place to go. Steve said he thinks that is viable and that anything would have to go through the Investment Committee. No matter what the Investment Committee decides we are still within the boundaries of the Investure Consortium and have to work within that framework. We have to use our voice with Investure. He thinks Investure is already going in the same direction. We do have to understand we are not out here doing it all alone…no matter what standards we develop they will either have to be consistent with what Investure is doing or we will have to leave them. Jim proposed that to go forward he will make a draft that reflects the views of the committee and what the recommendations might be and circulate that to the group prior to the next meeting. They will be discussed at the next meeting on November 26.
Planning for the November 19 Community Forum:
Jim said he wanted to start by talking about the presentation they had in the spring and how that went, etc. Steve said he, Neil and Will were on that panel with another faculty member. Alice Handy participated by Skype. It was organized by Reinvest Dickinson and the questions were directed to what they wanted to get at. Mara said she thinks the forum and the open question and answer session is great. It was decided the attendees will be able to bring their lunch to the forum. Pizza will not be provided as discussed at the last meeting. Mara said she wants to figure out how to get a broad spectrum of students to attend and not just Reinvest Dickinson. Others said they do not think that can be done. Will said they can encourage professors to get the word out to their students and other faculty members. Mara suggested some additional changes to Will’s announcement to reword the purpose of the forum. The committee discussed several changes and agreed to make a couple changes to make it clear they want to engage the community in the question and answer session. Jim said all of the available committee members are invited to sit at the table. Jim will open the forum by reviewing the work plan for attendees and have Steve give an overview of the endowment. Adam said he thinks the most compelling piece is the legal hurdle as to why it is difficult for the college to make these types of maneuvers. Steve said his opinion is bringing that up invites more questions than it answers. While Dana may talk about it in black and white it is really a gray area. He thinks somebody might attack it as being excuse making. He thinks the board’s fiduciary responsibility is extremely important. Mara said the point of the forum is to have this open conversation and they are well prepared to respond to any questions. Mike asked about the admissible range of sharing ideas the task force can talk about. Jim said out of respect for the process the group should not share any recommendations but they can speak around them pretty well. Jim said he is very comfortable with any of the committee members discussing the learning that was done over the course of the work plan and the meetings. Steve said it is ok to share thoughts but not recommendations.
There being no further business before the task force, the meeting was adjourned at 12:25 p.m.