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Sustainable Investments Task Force
9/24/13 Meeting Minutes

Task force members in attendance were:  Jim Chambers (Chair) (via telephone), Mara Donaldson, Michelle Fisher, Michael Fratantuono, Steve Hietsch, Will Kochtitzky, Adam Laird, Neil Leary

Absent were:  Margaret Lindsay (Co-Chair)

Others in attendance were:  Bronté Jones (VP for Finance and Administration), Keith Gillespie (Assistant Treasurer).

Guests in attendance were: Neil Weissman (Provost), Dana Scaduto (General Counsel).

Chair Jim Chambers called the meeting to order at 10:32 A.M.

The minutes from the 8/27 meeting will be moved to the 9/27 meeting or will be approved by email. Jim Chambers told the committee the 9/27 meeting will be a discussion by the committee members on Section 1 of the work plan.  Bronté Jones, the new VP for Finance and Administration has joined the group and introductions were made around the table.

Sustainability in the Curriculum: Neil Weissman and Neil Leary (posted on website)
Neil Weissman began their presentation by making an introductory comment by referring to a comment made by David Orr at a national conference where he referred to “green operations and brown curriculum”.  Meaning most colleges are moving toward commitment to sustainability but not making a comparable effort to include the fundamental mission of education.  Our sustainability initiative is focused on “green operations and green curriculum”.  That is what Dickinson is attempting to accomplish.

Neil Leary made these points as he went through the presentation:    

• There are a variety of reasons why a college like Dickinson might choose to make sustainability an important initiative. It is paramount on the education side. Sustainability and liberal education are natural partners. It is very holistic and invites all disciplines into dialogue. This is what the liberal arts are about and sustainability is at the heart of what we are trying to do.
• The campus is used as a living laboratory.  It provides a natural bridge between: academics and student development, with the Campus Operations staff and the Carlisle/Cumberland County community. Living laboratories are intended to be an environment where students are confronting authentic problems, finding out what they are, finding solutions, testing solutions, learning from mistakes and successes and actively being part of a process for creating solutions. (Examples: The Idea Fund and the solar project on Treehouse.) 
• It helps our students become engaged citizens. This goes to the heart of what think we are and what our mission is.  
• To integrate across the whole curriculum is not a unique approach to us. We want to engage students no matter what their major and have been successful so far. In the past year 1,455 students took at least one of the offered sustainability courses; 600+ took 2 or more; 200+ took 4 or more. The class of 2013 is the first year to track this information. It is not a requirement for graduation and we are still reaching 80%. 
• There is an essential connection between sustainability and global study. Looking at courses globally is becoming increasingly common.
• The CSE has funds to support student /faculty research projects. Each year they make from 3 or 4 to a dozen awards of these projects. Many faculty say sustainability is a significant dimension of their research.  
• A real value of the LEED buildings is they themselves can teach. The students learn things just by being in the buildings and being involved with them. There is modeling for student practices: what does it mean to actually do this stuff, how does it happen and how do we make it work. (the farm, SHOP, Climate Action Plan, Idea Fund) 
• We are a residential campus; how can we integrate there. Students are involved in using green practices across campus, participating in governance, students on this committee and others. 
• The CSE has the Valley & Ridge program which is a study group for faculty where they work together to help each other revise a course to be more effective by incorporating  sustainability into the course. 
• The CSE employs 10 interns per semester.    
• We actively manage 50 acres at the 200 acre Organic Farm. It provides food for the dining hall, 130 families receive food as part of the CSA program, they donate to Project Share and sell produce at the Farmers Market. We have student farmers who are employed at the farm. A lot of learning and research takes place at the farm. They also hold programs for community education and workshops for other farmers. 
• For 25+ years ALLARM has been doing citizen science. In the last couple years the focus has gone to shale gas monitoring. They have 10 – 12 students who work for them each year.

The following discussion took place:
Mike Fratantuono said the first slide listed 3 dimensions that resonate in the newest business literature.  Some years ago the notion was corporate social responsibility with the premise of share created value. The new premise is to create shared value and organizations are asked to simultaneously create economic and social value. The way to do that is: 1. to introduce new goods and services that play in that space; 2. find deficiencies inside the companies own value chain and; 3. to form relevant clusters. All 3 of those dimensions are on the first slide. It might be a way to articulate what is what Dickinson is all about. Neil Weissman explained this spring they are going to run and Eco-e mosaic. Three faculty members will work with students to think about the implications of sustainability for entrepreneurship and design a curricular path that will focus on this approach. They will look at what some other schools are doing. That should hopefully articulate the kind of things Mike just referred to. Jim Chambers asked what our soft spots are in trying to obtain grants to attract faculty. Neil W. said that is a complex question.  It is hard to find real soft spots as we have moved so far so fast and in most regards we are way ahead of other institutions. We need to continue faculty development and there are areas where we could strengthen things. One is the area of policy. Another is faculty resources. We are very anxious to try and find an additional earth scientist who works on water issues. That is currently unfunded and we need to find some funds for that.  In relation to faculty we have come forward quickly. Keeping faculty invigorated and bringing new faculty in is always something of a challenge. A lot of it has funding implications. We have done real well with outside grants. We have done less well in raising gifts in support of the program.

Neil L. said an area of strength we have not sufficiently capitalized on is with the farm. We do not have imbedded in the curriculum courses dealing with food systems and different approaches to growing and supplying food. Jenn and Matt’s time is constrained. We have not been able to figure out how to take advantage of the farm in our core curriculum.

Neil L. said another question asks what the place of humanities is in our sustainability initiative. Professors ask if their course is one that fits. He does not always have an answer to that. On the fundraising issue, we are generously supported by the college, but are not endowed. It seems like an opportunity that we have left fall by the wayside. Neil W. said in context we have done really well. But, the challenge is making sure we have an infrastructure so that it is sustainable itself in the long haul.

Jim asked Will Kochtitzky and Adam Laird about student reaction to the sustainability program and the feel they get from other students and the community at large. Will said he chose Dickinson because of the sustainability program.  Because of his major he is in Kaufman a lot and he and his fellow students almost feels there is the “Kaufman Bubble”. He wonders how to bridge that divide between the humanities and economics buildings across campus. Over the summer he was employed by Facilities to help renovate the “Dog House” where they are raising service puppies. He learned a lot about renovating a property. He wonders how the college can further engage students in this way. Maybe by creating a revolving loan fund and having them help to design the campus and help build the campus infrastructure.  He also works at the farm. Finding ways to work with your hands into the curriculum is huge. Adam said he feels we need more inter-disciplinary courses. He does not want to see the college become self-congratulatory and rest on our laurels. The college should continue to be hungry. Neil L. agreed this is a very dynamic area. We need to keep moving or we will be passed.

History of Divestment and Socially Responsible Investment at Dickinson: Mara Donaldson
Mara is going to speak about previous ethical and moral discussions on divestment. We have the opportunity for Dickinson to be a leader in the conversation that is going on at colleges and universities. We have the leadership and the opportunity to provide insight, guidelines, and real policy opportunities for other colleges like this. In terms of timing, she is looking at divestment discussions that happened on campuses in the late 70’s. Those discussions were taking part in a context and culture of Civil Rights in the United States. That provides the backdrop for looking at divestment of companies operating in South Africa. The South African situation with Apartheid is and was framed as a civil rights issue and that was where Dickinson began to get involved. But, Dickinson was not in a leadership position at that point. The backdrop internationally is what was happening in South Africa in 1977; a particularly violent time.

• Increasing attention in the national media of schools beginning the conversation on divestment or moving to divest. (Mara passed around a list of schools and when they did divest.) 
• Hampshire College was one of the first schools to divest in 1977. 
• On May 4, 1979 a letter was sent to Harvard by Ģ����Ƶ President Sam Banks in response to a letter about whether Dickinson was interested in the conversation about divestment. In the letter he said at that time there was no interest at Ģ����Ƶ in examining the issue. The administration and the board of trustees had chosen not to address the matter. It is significant that the letter was written but the topic was not mentioned in the letter. This gives a sense of where the conversation was going.   
• In 1984 Dickinson granted an honorary degree to BishopTutu at graduation. 
• In 1985 a coalition against apartheid was established by some faculty and students. In December 1985 the coalition sent their proposal about divestment to the president and board of trustees. The ethical issue they addressed very clearly in their proposal was institutional racism. The coalition felt by granting an honorary degree to Bishop Tutu the college had already taken a public stand against Apartheid. They wanted to address institutional racism in the most practical and effective way.  
• At Dickinson a lot came down to interpretation of the Sullivan Principles which were put in place in the 70‘s to provide non-discrimination in hiring and in providing improved facilities management and pay to South African blacks. 
•  The two basic coalition proposals were:  1. No additional investments in companies working in South Africa 2. The college will divest from all holdings in companies operating in South Africa within a year. They wanted complete divestment. 
• Of the 65 colleges on the list who divested, divesting did not have a negative impact and they did not suffer economically.  
• On December 31, 1985 Michael Britton, the Treasurer, began putting together an internal document of responses with guidelines on these kinds of questions. It set up a rationale for investment policies for the board of trustees and proposed setting up a subcommittee on social responsibility investments. His principal objective was to obtain the best possible return while avoiding risk of loss. He also said the college must take into serious consideration the social and moral implications of its actions.  
• In January 1986 the board of trustees Committee on Finance and Investments established a sub-committee to examine portfolio investments. They held open meetings and solicited reports from Cambridge Associates who were the financial consultants to the college at that time. 
• A subcommittee resolution in 1986 began by condemning Apartheid. It refused to recommend a blanket policy of divesting. Their interpretations made the argument that the Sullivan Principles are working and it is better to have investments in South Africa because we can be a force for change working from within. They did make the statement that they would not invest in companies who did not subscribe to the Sullivan Principles. 
• In May 1986 the board of trustees approved a resolution for partial divestment. They rejected full scale divestment. They identified 29 investments in the portfolio or 28.5% of the total market of the colleges’ portfolio and within that only 2.4% of those investments were in companies that did not subscribe to the Sullivan Principles.  
• In 1987 new college president George Allen wrote a memo to the coalition reviewing the process and the outcomes. He also stated honestly there had been an error in the process. The board of trustees had not seen the full 5-page document from the coalition but a summary of the document. He asked the coalition for an updated copy and gave it to the board. 
• In 1987 Michael Britton exercised the proxy in voting for divestment of particular companies.

Summary:

Because of its commitment to sustainability and that momentum Dickinson has a great deal to model for other colleges and universities. In Apartheid the cultural impetus that drove the moral and economic issues came from the culture. We do not have that same moral impetus across the culture. That is changing. What we do have is a role as a place based liberal arts college taking leadership in the moral issue of our time. With the commitment to sustainability the college has already taken that stand. It is the moral issue of our time. The process is familiar because we come from the tradition of gathering information and forming groups. The coalition against Apartheid owes a large part of their origins to the honorary degree given to Bishop Tutu. Reinvest Dickinson owes their origins to Bill McKibben and his presence on campus last year. The Financial Management process is a big difference from the past. Communication and transparency has been a value of this task force from the beginning. The mistake not giving the board of trustees those 5 pages in 1987 was a major communication break. Perhaps the outcome would have been different if that had not happened. It is one of the reasons communication and transparency is so important.

The following discussion took place:
Jim asked if she found any other movements in the history of the college. Mara said she was not researching that so did not know. Mike added in 2007 Annette Parker, at the request of William Durden, had formed a group called the Socially Responsible Investment group. It was the same kind of questions. Tobacco was one of the areas that came under review. By that time Dickinson had already moved to Investure. There was discussion with Investure but he does not remember a clear resolution.

Legal Observations in Divestment: Dana Scaduto
Dana began by referencing the document that was forwarded to the group titled Responsibilities of Trustees - Prudent Investor Requirement. She explained it is a legal requirement the trustees are bound by as fiduciaries of the college. Their responsibility is to care for and maintain the assets of the college and in particular the endowment. Because we are chartered as an educational institution the endowment must be used to advance the educational mission of the college. There are laws and best practice standards on how the board must invest the endowment for the benefit of the institution. The reality makes it clear, no matter how well intended or worthwhile the socially sustainable investment strategy or concerns may be, if those strategies limit the success of the investment program by reducing the portfolio’s total return, the trustees are at risk of failing to fulfill their fiduciary duty to the college. The socially responsible investing strategy comes in only where there are two investments that can perform equally. The trustees can choose the one that is more sustainable as opposed to the one that is less sustainable. Their ultimate objective has to be by law the bottom line for the mission of the college which is education. That is where the law intersects with your practices.

The following discussion took place:
Mike Fratantuono asked about the clarity of the example of investment A & B because it gets muddied when you have a pooled approach. He wondered how that plays out with Investure when you get down to a particular manager of a fund who we put our faith into to make choices. Dana indicated that we are not able to look at a particular investment because the investments cannot be unbundled in the Investure model. If the total return on the Investure portfolio is 15 percent and if we left Investure in order to alter a single investment and are only making 7 or 8 percent, there is a clear faltering in the trustees’ duty to maximize returns for the educational mission of the college. Dana suggested that we are not looking at simply swapping one investment in the portfolio for a more socially sustainable one.  Our investment opportunities are intertwined with other investors and group decisions.   Mike asked if the choice of A or B for us is Investure or something else. Dana said right now it is Investure or something else. We are successful within Investure because of the buying power with the partners within Investure. We make decisions together with others for how the pooled money will be used. The college says it does not have a choice, but it does.  It can choose to leave Investure. But, leaving Investure has a very high price for the college  that is incompatible with the trustees’ obligation to grow the endowment to the best of its ability for our educational objective, not a limited socially sustainable one. We have had remarkable success over the years, including in the down-turned markets, that the decision to leave Investure for the purpose of controlling a small portion of the portfolio would be hard to justify from a fiduciary perspective. The bottom line is education is the mission of the college and the trustees are legally bound to make investment choices that best advance the educational mission of the college. Adam Laird asked a hypothetical question. He wondered if, because the endowment is necessary to aid education, could this action be considered education itself. Dana does not think so.  The educational value of sustainable investments can be taught in the classroom and the success of sustainable investments can be tested, theoretically at least, in the classroom, as well. The SITF is actually proposing the use of the endowment of the college for a purpose that does not maximize the return on the investment which is the trustees’ fiduciary duty. Coming back to the Prudent Investor Rule; unless the college is comparing  two investments that are equal performers, one of which is a socially sustainable choice, it does not meet the prudent investor test. Adam asked if there are positive repercussions that could come from a symbolic action. Dana said symbolism is not enough and it does not supersede the duty of the trustees. This question of symbolic gesture has been explored in depth at other schools and has been found insufficient to overcome the obligation to invest the assets of the institutions prudently from a financial perspective.  It would not change the behavior of the fossil fuels producers. Adam wondered if the publicity of putting our name on something could be positive financially or in advancement to be weighed against a possible loss. Mike said it would be by brand enhancement. Dana noted that Dickinson already has its brand on sustainability in a leadership role in the United States. We already have a presence and a brand that associates Dickinson with sustainability and responsibility with the environment.  Will Kochtitzky asked if this rule applies to any other non-profit. Dana said it applies to every corporation. Will asked how institutions that have divested are ignoring this and still following their responsibilities; because they are doing it. Dana said she can only speculate.  It may be that other schools have their missions written differently, as well as what their investment success has been historically. Their boards could have determined that sustainability, more broadly, or fossil fuel divestment, in particular, is a fundamental principle of their mission. Dickinson’s mission is in its charter (a “useful education”) and it is most likely not going to change. Will asked whether assuming other schools have the same charter we have, an institution could still divest?  Steve said they could be looking at a different alternative. Our alternative is staying with Investure. Bronté said it may also depend on how their endowment is invested. You really need to look at who they are, how they invest and what their returns are.

Update: Communications from Reinvest Dickinson: Will Kochtitzky
Jim Chambers directed the conversation to the letter dated September 9, 2013 from Reinvest Dickinson. He had concerns about the content of the letter and wondered if they were distancing themselves from the process. Will is the representative from Reinvest Dickinson and will clarify any questions on the content of the letter. Jim opened the discussion to the committee for any concerns they had. Will said the letter was meant to clarify, not muddy the waters. He is 100% in the task force and is 100% in Reinvest Dickinson. But, he considers these to be two different roles. Mike Fratantuono said he had said before that Will is showing intellectual integrity and is finding balance between the two roles. Steve Hietsch agreed completely. Jim agrees Will is representing both the task force and Reinvest Dickinson well. He wants to make sure we are keeping an open dialogue and the process is working as quickly as it can. It is a good way to have informed discussions and decision making meant to be a transparent process and we will keep working at it. Will clarified that the committee should not regard Anna McGinn as the leader of Reinvest Dickinson. They have attempted to allocate different people towards different groups. They like to think they are a group of many leaders, no one person being the leader. Other students are equally as crucial to the organization.

Preparation for 9/27 meeting:
Jim added the meeting on Friday is meant to be a discussion of the materials covered in the previous meetings. He asked the committee members to do some homework as preparation for the meeting. He wants to get reactions from each person on what you have learned. He wants to see where you are in terms of thinking about this right now.

There being no further business before the task force, the meeting was adjourned at 12:25 PM.

Respectfully submitted,

Vicki Rotz