Green financing: The College’s investment in reversing climate change

To the many members of the community who have urged the College to lead in the fight against climate change: Thank you. On behalf of the Board of Trustees, I want to express my appreciation for your passion and your conviction that the College must make a serious commitment to address this urgent crisis.

While there is a diversity of opinion in our community as to what constitutes meaningful action and what form our leadership should take, please know that every member of the Board shares your passion and is deeply committed — many of us in our personal or professional lives as well as in our institutional roles — to working toward solutions.

Last year, we announced our efforts to address climate change. They included investing the endowment in climate-addressing opportunities, reducing our energy consumption and greenhouse gas emissions and investing in our educational mission, including making anthropogenic climate change a campus-wide theme of inquiry. Mark Tercek ’79, president and CEO of The Nature Conservancy, called them, “the kind of concrete actions that colleges can take toward lasting change.” Mark is now a member of the Board of Trustees, and we couldn’t be more pleased to have his expertise and wisdom at the table.

The divestment movement at the College and at other institutions has inspired many to consider climate change more urgently and fully than ever before. In response, we are endeavoring to invest the College’s endowment in projects, companies and technologies that benefit the environment. As President Falk described in his letter to the campus earlier this month, we have already committed to significant investments in two solar projects that will enable a substantial reduction in fossil fuel use in Williamstown. Importantly, after spending months developing plans for integrating impact investments into our investment pool and meeting with fund managers, peers and consultants, we’ve just made our first impact investment, and more are to come.

With respect to the endowment, the Board made a studied and careful decision not to adopt a divestment policy.  Although the decisions of peer institutions were not an important part of our analysis, most of our peers have, in fact, reached the same conclusion. Further, the College’s exposure to fossil fuel investments is not materially different even from those schools (at least those with substantial endowments) that have announced they’re divesting. In almost all of those cases, the decision to divest was limited to direct holdings of certain stocks, and the institutions had few if any direct holdings from which to divest. The vast majority of their assets are held in commingled funds that were unaffected by this divestment approach. The College made a strategic decision to phase out all direct holdings several years ago.

Still, we know that many in our community want the College to try to influence the broader investment community on the issue of climate change, and so the College’s Chief Investment Officer, Collette Chilton, recently sent the letter below to our fund managers, more than 60 in all.

“Dear Williams College Investment Manager:

“It is extraordinary for us to write to all Williams College investment managers. However, the urgent matter of global climate change warrants action by the College across many dimensions, including this one.

“Last September, Williams College President Adam Falk and the Williams College Board of Trustees announced that Williams would assume a visible leadership role and take specific, substantive and comprehensive actions to contribute to the important work of reducing greenhouse gas emissions.  Williams’ plan is ambitious …

“At the heart of the plan are commitments to reduce the College’s greenhouse emissions, achieve carbon neutrality, and invest significantly in sustainable-energy and carbon-reduction projects, as well as in the College’s educational efforts related to the environment. We expect these planned investments will total approximately $50 million over the next five years.

“We write now to seek your help in this effort. We ask that you consider carefully the impact of potential investments or investment strategies on greenhouse gas emissions, and that you endeavor to understand and, where appropriate, influence the environmental responsibility practices of the companies with which you are involved.

“We appreciate the work that you do on behalf of Williams College, and thank you for helping us with this critically important initiative. We welcome any questions you may have and look forward to further dialogue with you.”

We hope this effort contributes to a heightened sensitivity among our managers to the environmental impacts of their investments and strategies. And we hope that, with increased institutional investment in renewable energy and broad efforts to reduce energy consumption by individuals and institutions — thereby decreasing the demand for fossil fuels — we’ll begin to see lasting change.

Michael Eisenson ’77 is chair of the Board of Trustees. He lives in Wayland, Mass.

Comments (12)

  1. Pingback: Eisenson ’77 on Green Finance I : EphBlog

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  3. Like many Williams alumni I do not consider climate change an “urgent crisis”.

    1. In response to Len Platt: You would consider it urgent if you and your family and everyone and everything you have known, including the graves, artifacts and memories of your ancestors, lived and existed at sea level. The urgency most people seem to feel unfortunately depends on our immediate exposure to the effects of climate change. Instead, we need to imagine ourselves in the shoes of those effected, and that’s what a liberal arts education equips you to do. We open our consciousness to the world and to others in it, beyond ourselves, beyond our Purple Valley.
      From now, the stretch of consciousness will be more than physical and spatial. The people doing the damage now — we — are not the ones who will be experiencing the effects. The resulting misery of this transaction of climate change will have come exponentially after we are dead. So now human consciousness must again unfold to a new and, until now, rare level of awareness and sympathy for those beyond our lifetimes. At one time, according to our understanding or our world, those “others” lived on the other side of a hill from us. As we expanded our range, they then were across the sea, then the other side of the planet. In each case humans had to overcome a self-preserving selfish instinct to consider those “others” as less than ourselves, less human, and therefore less deserving of resources to live. Now again we must consider the lives of people we will never meet and never share the planet with, and this time they are not just separated by space or culture but also by such time that we will never meet them, indeed, we will be forgotten by them, just as we have forgotten the vast majority of people who came even a couple of generations before us. When considering future generations we are no longer asked to consider just our own legacy to them. We are now to consider THEIR legacies and their opportunity to make something of it. They should have every opportunity.
      We are entering a new chapter in the awakening of our consciousness. The stakes in success or failure are not immediately apparent to us. We will never personally experience the outcome of this transaction. But we must awaken to it as if we will be. That is the new frontier of human consciousness. Someone’s life depends on it. We might as well consider it our own.

    2. I agree with you Len.

      As a committed environmentalist, carbon based climate change appears to be more a political issue more than an environmental issue. Tying global climate change to human CO2 generating activity doesn’t pass the sniff test. Sure, CO2 is a greenhouse gas, but fluorocarbons are thousands of time more potent. Methane and even water vapor are much much more powerful greenhouse gases than CO2, are produced by the boatload by human activity, but no one ever mentions them.

      There are other factors like fluctuations in solar activity and geological activity such as gas seeps and volcanoes. These are both bigger factors than human influence. I cringe every time I read that “the science is settled”.

      Then there’s the question of how big a problem it is. Global warming does bring benefits such as an extended growing season. The record shows that the Earth’s temperature has fluctuated much more than the one or two degrees we talk about in climate change conversations, and as recently as when the Vikings were able to maintain communities (that I think grazed sheep) in Greenland or the year with no summer after the Krakatoa eruption.

      Notice that the climate change propoganda is always trying to get you to spend money: buy a prius, offset the footprint from your 7-day cruise to the Bahamas or support some government grant boondoggle. No one ever recommends you save the environment by going for a walk or staying home and reading a book.

      I support the reduction in fossil fuels, but it’s not the #1 problem that Al Gore makes it out to be. And people who really care won’t let climate change distract us from the really important environmental issues like land use, soil destruction, invasive foreign species, overfishing and the million different low volume pollutants that science still hasn’t conclusively linked to the massive increase in cancer and chronic illnesses/conditions America has seen in the last century. These issues hurt us a lot more than climate change and are more easily addressible. Would that they got a tenth of the news coverage.

      I’d hope Williams with it’s independent streak still fosters an environment that supports students’ research even when it goes against the socio-political grain.

  4. Sorry, Len, but I don’t think you speak for the majority of alumni. Speaking for myself I belief climate change is an urgent crisis and strongly support the efforts of the College to confront climate change through a variety of mechanisms, including the investment of the College endowment in forward-looking, proactive vehicles that actively work to forestall climate change and protect the environment, without sacrificing market rate returns. The NYT op-ed piece by Hank Paulson calling for the deployment of $90 trillion in private capital to combat climate change via “green finance” shows that those at the heart of Wall Street believe impact investing is ready for prime time. I’m proud of the College for studying this subject carefully and moving forward with intelligence and foresight.
    Climate change is an urgent crisis; it is also the greatest wealth creation opportunity of our age as we transition to a clean energy economy. Williams is out in front on this issue and will profit from it financially as well as intellectually.

  5. Investing in solar power has a place in individual building settings (with of course subsidies and tax credits). Industrial scale solar plants only prosper based on government mandates and subsidies. If that is the direction the College is headed in regards solar I think they are making a mistake.

    The College also wants to invest in wind. Industrial wind is a scam. Anyone who has taken the time to understand the subsidized economics and cares about open space, birds and other wildlife, or property and environmental values would be fiercely opposed to wind projects. It takes approximately 7.5 years of heavily subsidized wind power generation (at the promoters’assumed efficiency levels) to offset the carbon used in the concrete, steel, fiberglass and other materials to make these monsters. (at the 1.5 megawatt size (most industrial wind turbines do not last that long and have to be rebuilt or replaced). This statement does not include the costs of industrial sized power lines, substations, etc. which accompany industrial wind projects.

    I have yet to see what how the College defines the noun”sustainable”-what that really means. It is almost a semi-religious term or value that allows those who use it to sound good without really meaning anything. It is a fashionable word to use since Is there such a thing as a one sentence definition of that term in terms of the road scope of human activity ? I have seen only one and it did not come from Williams.

    Words/euphemisms like climate change and sustainable are cheap and easy to use because no one knows what they mean-they are just values, like good and evil. I think Williams has fallen into this habit big time.

    I know Williams is trying to be fashionable and correct sounding with all this talk but it seems somewhat mindless to me.

  6. I disagree with Lindsey who says “No one ever recommends you save the environment by going for a walk or staying home and reading a book.” Conservation is the lowest-hanging of the carbon apples and conservation-based advocates like me roll their eyeballs at the carbon energy waste abounding. As we move more quickly toward this unfolding world environmental disaster, millions of people will be searching for solutions, some using new discoveries, some changing behavior. Unfortunately, the scientists will conclude, I believe, that by themselves, going for a walk or reading a book will not alter the ten-year or twenty-year consequences.
    I am surprised to see these comments from Lindsey and Lenn. No doubt my lifestyle choices (when emulated world-wide) enhance or diminish climate change, so I concede my personal hypocrisy to the extent that there are carbon-based creature comforts I won’t (yet) give up. Still, I’d support and obey laws outlawing carbon emissions that contribute directly to raising the earth’s temperature. To me, it’s like pouring waste oil down the drain, which used to be convenient and fine.

    1. That’s my point. Everywhere you turn people are saying “DOOM from climate change”, but no one tells you to modify your behavior to pick the low hanging fruit of conserving more or just using less. They say “buy a prius”, or “live it up but pay to offset your carbon footprint”. Actually the only organization telling me to turn my thermostat down is the power company who perversely charges me a lower price the more power I use.

      I don’t deny that CO2 is a greenhouse gas contributing to global warming. I just question how much warming CO2 will actually cause because the “science” used to support it is heavily influenced by money and politics and I don’t think the theories adequately address the doubts I raised in my other post. Take a look at the people railing against carbon and you’ll see they’re all talking their books, from the scientist chasing politically allocated grant money, to Hank Paulson salivating over how much money Wall St. will make when every business is forced to trade carbon credits, to the biofuels bureaucrats at the EPA mandating that we put corn ethanol in our fuel, to Al Gore flying his private jet halfway around to receive another award for being a friend of the Earth. If CO2 were a problem, it would be real simple to just tax carbon at the well head to reduce use. But there’s no money in that. Instead the well connected are lined up for a Solyndra grant or the carbon credits all the auto manufacturers have to pay to Tesla to offset their emissions, which add $1000 to the price of the average (non-Tesla) car.

      Then there’s the question of whether it fossil fuel use won’t die out organically (no pun intended) as Moore’s Law continues to apply itself to the photovoltaic industry. (Look that up. there’s a good reason for optimism).

      Bottom line, there are good reasons to doubt that CO2 based global warming is nearly as urgent as it’s commonly made out to be. And I hope the Williams trustees, and all of us focus our beneficial energies and investments on the areas where they can do the most good, and that means taking some time for critical thinking to avoid getting caught up in fashionable trends.

  7. There is no doubt the planet is entering a severe increase in overall temperatures and a huge increase in CO2 production. Most of this is man-made, though there has been an overall increase in both for the last 40,000 years. To decrease anthropogenic climate impacts there are several easy steps:
    1. Every residential and small office building should be equipped with sufficient solar panels to generate all its own electric power. In most climates, every house and small office building should also be equipped with solar hot water heaters (up to 1/3 of most residential electric use is for hot water). However, utilities fight the expansion of solar power because it takes away their income stream (this is called the “death cycle” of the utilities).
    2. We are getting to the stage where batteries can store this power during non-daylight hours. Or an electric car can be used for the same purpose.
    3. Electric cars should be required at least in cities where the pollution from internal combustion vehicles is a major health hazard. Electric cars are increasing annually in range and will soon be able to replace all combustion cars (sadly, including my Porsches and Ferrari).
    4. Every building should be constructed with sufficient insulation to reduce the need for excessive heat or air conditioning.
    5. However, such environmentally destructive technologies such as industrial wind power should be banned. Because wind is so erratic, wind projects must be backed by constantly turning fossil fuel plants (this is called spinning reserve), which use nearly as much fossil fuel as the wind project is supposed to replace. On average, US industrial wind projects only work 20% of the time. Much of the power produced is lost in transmission, or is “curtailed” (dumped) by utilities because it is generated when it is not needed. Further power is used to turn the turbines when there is no wind so they don’t seize up. On average, industrial wind projects provide only 7-9% of their nameplate capacity. They slaughter millions of birds and bats, destroy property values, make people ill, ruin visual resources, and drive people from their homes, but they enrich investment bankers and energy companies who make billions of dollars from taxpayer subsidiess. They should be banned, but our environmental groups, which lobby for them, receive millions of dollars (again from the taxpayers) in the form of contributions from the same groups making billions from them.

    1. Well said. I glad that there is at least one additional person associated with Williams who can articulate the fraud and scam of industrial wind. That the College is even considering such investments is shameful. Some years ago I attempted to have a discussion with Williams folks about wind projects in the Berkshires proposed near Williamstown. A truly futile effort on my part.

  8. I write to commend the Board of Trustees’ statement recognizing the urgency of climate change and the decisions the Board has taken to allocate a portion of the endowment for “climate-addressing” investments; to reduce Williams’ carbon footprint; and to make anthropogenic climate change a campus-wide theme of inquiry and discussion. As previous alumni writers have observed, much more needs to discovered about the various causes of climate change and the extent of humanity’s impact on the world’s climate and the other natural systems on which all life depends. That said, knowledge of the big picture is clear and uncontestable: the world’s oceans are warming and acidifying; global average surface temperatures are increasing (there is now better than a 99% chance that 2016 will be the hottest year in recorded history); sea levels are rising due to the warming of the oceans and land ice melt; and many plant and animal habitats, ranges, and behaviors are being significantly altered as a result of these changes. Secondly, we know from hundreds upon hundreds of scientific experiments and tests that adding to the atmosphere an increased load of greenhouse gases, such as CO2, raises temperatures. If we are to bend the curve on global warming, we need to keep fossil fuels in the ground, which is why I personally favor an investment policy of divestment. Still, all steps are forward are welcome, which is why I wish to record my support for the action the Board of Trustees has taken.

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