Report on Board Decisions on ACSRI Proposals
September 20, 2016
To Members of the Boston University Community:
I am writing to convey the results of the discussion by our Board of Trustees of the proposal from the Advisory Committee on Socially Responsible Investing (ACSRI) recommending actions on fossil fuel investments and climate change.
Anthropogenic climate change caused by use of fossil fuel energy sources is possibly the largest and most complex challenge mankind will face during this century. To mitigate the risk of increasing global temperatures and the resulting sea level rise we must drastically reduce our emissions of greenhouse gases from the use of fossil fuels. Current projections are that fossil fuels will continue to be the major source of global energy long into this century; consequently, effective adaptation to the effects of climate change will be equally important.
It was within this context that, after more than a year of deliberations, the ACSRI made three proposals to the Board of Trustees. The process followed by the Board of Trustees and its decisions are described in a letter to the ACSRI from Chairman of the Board Kenneth Feld. I summarize these decisions here and describe the next actions of the University.
Let me begin by reviewing the proposals by the ACSRI and the decisions of the Board of Trustees:
ACSRI Proposal 1. To signal the importance of, and the University’s commitment to, the global effort to reduce the human carbon footprint, the University should, within its endowment, prohibit new and divest of any existing direct investments in those companies that (a) continue to explore for new fossil fuel reserves of any kind since the global fossil fuel reserves are estimated to be larger than the amount that can be used and still remain under the accepted estimated warming limit of 2 degrees Celsius or (b) extract coal and tar sands, the most carbon-intensive fuels, until, in the University’s judgment, those companies curtail such activities to drive their carbon footprint to acceptable levels.
This proposal must be undertaken in concert with the requirement to meet the University’s fiduciary duties to its endowment.
Action of the Board of Trustees
- That the University commit, on a best efforts basis, to avoid investing in coal and tar sands extractors; perfect implementation cannot be assured, however, given the University’s inability to have total investment control due to the endowment’s extensive use of (a) commingled investment vehicles for which the investment manager has complete investment authority and (b) passive index-linked investments.
- That the Investment Committee be asked to report to the Board of Trustees at least annually on its experience with the above commitment.
- That the Board revisit this issue every five years, or more often, as economic, climatic, technological, and other developments may warrant.
ACSRI Proposal 2. In order to speed up the global effort to reduce the human carbon footprint, the endowment investment office should seek to include managers who specialize and have expertise in renewable energy sources and/or technologies focused on the reduction of greenhouse gas emissions. It is expected that the number of institutional quality “green” investment products will continue to grow in the future, which will offer an expanding opportunity set for the endowment investment office to consider.
This proposal, like number 1 above, must be undertaken in concert with the requirement to meet the University’s fiduciary duties to its endowment.
Action of the Board of Trustees
This recommendation describes the University’s current approach, although it was undertaken in the normal course of operations and is not set forth in a formal investment policy. The Board of Trustees endorsed this investment strategy.
ACSRI Proposal 3. In order to increase the University’s commitment to and focus on sustainability across teaching, research and operations, the University should develop and incorporate into its Strategic Plan a detailed Climate Action Plan (the “CAP”) that should outline specific near, intermediate and long-term plans and associated goals for markedly increasing:
- a. The amount of energy sourced from green alternative power producers (e.g., solar and/or wind either via the University’s power purchasing arrangements or on-campus installations);
- b. Energy use efficiency to reduce power demand;
- c. Educational opportunities for students to understand climate change, its ramifications, the need to solve the problem in their lifetimes and explore mitigation and adaptation strategies;
- d. The University’s cross-disciplinary coordination and support of research related to climate change, mitigation and adaptation;
- e. The understanding of all community members (students, faculty and staff) that their individual choices and actions can have a profound impact on reducing the University’s (and their own personal) carbon footprints; and
- f. The University’s preparation for the possible effects of future climate change on its physical plant.
The CAP should include implementation time frames, associated costs and funding sources, as appropriate, articulate specific measurable goals with respect to both sourcing greener energy and reducing overall energy demand, and be a living document that is continuously refreshed and updated. Also, given its inclusion in the University’s Strategic Plan, the CAP should be posted publicly on the University’s website and progress, with respect to its contents, should be regularly reported to the Board of Trustees and the community.
Recognizing that the operating budget is a zero-sum proposition and that preservation of intergenerational equity for endowment distributions is important, the entire community will bear the burden of the compensating operating budget pressures (e.g., reduced student services, employee compensation, financial aid and/or tuition increases). However, the savings generated by the University’s efforts to reduce overall energy demand should partially offset this burden.
Action of the Board of Trustees
The Board of Trustees endorsed this proposal. The Chairman of the Board, Kenneth Feld, asked me to develop a Climate Action Plan for review and consideration by the Board of Trustees.
I believe that the decisions of the Board of Trustees constitute a sound basis on which Boston University can proceed in a deliberate and judicious way to face the challenges of climate change. The development of the Climate Action Plan (CAP) is an opportunity for our community of students, staff and faculty to help shape the University’s long-term strategy for further reducing our greenhouse emissions through energy conservation and the use of non-fossil-fuel energy sources and by mitigating the effects of climate change on the University.
In the coming weeks, I will work with the University leadership to constitute the working committee of faculty, staff and students for the development of the CAP. The process for developing the CAP will be open and consultative and will build on the considerable progress we have made over the last decade in fostering campus sustainability.
Please join me in thanking the members of the ACSRI for their efforts that led to the committee’s recommendations to the Board of Trustees and the ensuing actions of the University. In the years ahead, I know we will be able to count on all members of our community to engage in the development and implementation of the Climate Action Plan.
Sincerely,
Robert A. Brown
President