How Green is My Endowment? Not Very

Posted by: Louis Lavelle on June 18, 2008

As members of the greenest generation, a great many of you are probably looking at the sustainability initiatives dotting the collegiate landscape and nodding your approval. Such initiatives may even be a factor in your decision to attend School A over School B. But one of the things you’re probably not looking at is whether the college you’re considering is putting its money where its mouth is.

You should be. With hundreds of billions of dollars in assets, college endowments can be a powerful force for social good. But a new report out by the Sustainable Endowments Institute shows just how badly the nation’s college endowments are dropping the ball.

The College Sustainability Report Card 2008 describes the great progress that has been made on campus--61% of schools have at least one LEED-certified green building on campus, for example. But when it turns its attention to the endowments, it's clear that a lot of progress is needed. Only 19% of the schools surveyed invest in renewable energy, and only 6% contribute to community development funds. The vast majority don't even publicize their holdings or inform the campus community about how they voted on sustainability measures proposed by shareholders of the companies where they hold stock--so much for the great academic tradition of open and unfettered inquiry.

The report card includes profiles of 200 institutions. Here you'll find that Harvard, with its nearly $35 BILLION endowment, made a $20 MILLION community development investment (to support low interest loans for affordable housing in Boston and Cambridge). That was nearly a decade ago. But you'll also find great news, too, like Tuft's creation of a $100 million microfinance fund in 2005, or the green fund established by Middlebury College as part of its latest capital campaign.

There's a lot that America's colleges are doing to aid the cause of sustainability. But they can be doing a lot more by investing their endowments in companies that will be making solar panels, wind turbines, and high mileage electric cars. These are risky investments, but the big endowments have shown a lot of tolerance for risk lately--hedge funds, venture capital, private equity, and other alternative investments now account for a big chunk of the biggest endowments. If donors started insisting on a "sustainability option" for their money, and students started demanding greener investments, maybe we'd start seeing fewer heirloom tomatoes in the cafeteria and more changes that really matter.

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