Statement by the Board of Trustees and President Adam F. Falk on the College’s Role in Addressing Climate Change

Many members of the Williams community have called upon the college in recent months to assume a visible leadership role in responding to the urgent challenge of global climate change. The Proposal for Divestment presented to the Board of Trustees in December of 2014 on behalf of more than 500 members of the community represented a particularly comprehensive statement of the issue and call to action. In response, the Board elevated consideration of climate change, and of the college’s role in addressing climate change, to a leading agenda item for 2015.

We have spent many months studying the set of issues raised by our community. This work has included the input of a number of standing committees of the college, including the Advisory Committee on Shareholder Responsibility (which issued a thoughtful report in April 2015) and the Campus Environmental Action Committee, as well as many other resources at the college, including the Investment Office, the Zilkha Center, and a number of faculty members and alumni with expertise in environmental and policy matters.

We agree strongly that global climate change is an urgent issue and that Williams has an obligation to address the issue in substantive ways. Williams, as one of the most advantaged institutions of higher learning in the country, with a long history of environmental leadership and a tradition of producing leaders with the willingness and ability to address complex global problems, must assume a leadership role both on our own campus and in the national conversation in the fight against climate change.

The proposal for divestment boldly asserts that:

“It is time to define a new path forward. A crisis of this scale demands attention and action. It demands that we revitalize civic responsibility, recommit ourselves to meaningful action, and expand our horizon from the narrow confines of our homes to all of the communities and institutions to which we are bound. A political and ecological crisis of this scale demands the leadership that the Williams community can offer.”

We are in complete agreement with this call to action.

As discussed in more detail below, we have determined that the college will respond to this imperative not by divesting from a particular set of companies but rather by making significant investments on our campus and beyond. We expect that these planned investments will total approximately $50 million over the next 5 years, and will represent leadership among our peers in addressing the challenge of climate change. We will invest, not divest.

We are grateful for the activism of our community—students, faculty, staff, and alumni—and, indeed, the divestment advocates have truly inspired the Board and the senior leadership of the college to address climate change more urgently and fully than ever before. We also appreciate that the divestment proposal is driven primarily by a desire to increase awareness and advance the conversation about climate change through a very public act, even if that act is largely symbolic.

It is our strongly held view that all of us—all members of the Williams community, and indeed all members of society—bear some culpability for the current state of the climate, and that all of us, in turn, have a moral responsibility to invest in the solution. We agree that this moment of critical consequence calls for very public action by the college, and we believe this action should offer substantive leadership, and that the investments outlined below represent the kind of leadership that we can and should expect from Williams.

First, we commit to make the investments necessary to achieve a substantial reduction in Williams’ net greenhouse gas emissions by 2020.

In 2007, the college committed to a goal of reducing its greenhouse gas emissions to 10 percent below 1990 levels by 2020, and we are 75 percent of the way there. In light of the much greater level of urgency today, however, the college will set a much more ambitious goal: to reduce our net greenhouse gas emissions to 35 percent below 1990 levels by 2020. This new goal reflects recent studies and recommendations from the Campus Environmental Advisory Committee and the Zilkha Center, and it is considerably more ambitious than both the college’s previously stated goal and the goals recently established by the Commonwealth of Massachusetts.

To accomplish this, we will undertake or continue a number of initiatives on campus and beyond:

  • We will invest heavily and consistently in new projects to lower energy use in our existing buildings.
  • For all new and ongoing construction projects, we will continue to invest deeply in sustainable design, building practices, and systems that meet ambitious energy efficiency goals.
  • We will initiate new solar electricity generation projects on campus and on college-owned land.
  • Whenever possible, we will purchase electricity from renewable sources.
  • We will invest in projects that reduce carbon emissions in our local region, helping to offset the impact of our own emissions.

These latter two strategies will be pursued most effectively in collaboration with institutions in the region that share similar goals. To that end, we have entered into a partnership with the Five Colleges consortium to engage Sustainable Energy Advantage, an experienced regional consulting firm, to assess and recommend projects and strategies for procuring renewable energy. We are also joining with Smith and Amherst colleges to work with the Center for EcoTechnology to pilot a Community Climate Fund, which would identify and support local projects that reduce energy use and carbon emissions.

Second, Williams aims to achieve sustainable carbon neutrality by the end of 2020.

Having ambitiously reduced our direct net emissions on campus by 2020, we will then seek to take the further step of achieving net carbon neutrality for the college through the incremental purchase of carbon offsets on the global market. Moreover, if it is not possible by 2020 to obtain all of our electricity from renewable sources, we will seek to purchase renewable energy credits (RECs) such that all electricity purchased by the college is either directly or indirectly produced by renewable sources.

We are sensitive to the impression that the college will be “buying” some portion of its way to carbon neutrality. However, the purchase of high-quality, audited carbon offsets enables projects that represent true and immediate net reductions in global carbon emissions, and we will always prioritize lowering our own energy use above purchasing carbon offsets and RECs on the market. Indeed, the most important reason for postponing the purchase of carbon offsets until 2020 is so that we first challenge ourselves strenuously to reduce our own consumption of fossil fuels. Ultimately, though, with current technology it is not possible for the college, or any similar institution, to achieve full carbon neutrality without the contribution of such offsets and credits.

Third, the college will launch a partnership among students, faculty, and staff to challenge our community to reduce its consumption of fossil fuels.

We cannot claim to exercise moral leadership in addressing the problem of climate change without making meaningful changes not only to campus buildings and in how we purchase electricity but also in the way we choose to live. Thoughtful consideration of and adjustments to our own consumption of fossil fuels and other resources are of both practical and symbolic importance, and should play a very meaningful role in the education we provide students. Our community will explore potential changes in policy and practice that would support short- and long-term reductions in energy use on campus. The Campus Environmental Advisory Committee has agreed to lead a process involving students, faculty, and staff to develop recommendations in response to this challenge.

Fourth, we will invest the endowment in projects that benefit the environment.

In addition to investing from our endowment in local and regional sustainable energy and carbon reduction projects as these become available, we will also seek opportunities to allocate a portion of the endowment to “impact investment” managers whose areas of expertise include companies, projects or technologies focused on the reduction of global greenhouse gas emissions. While high quality opportunities of this type are only now beginning to emerge, we expect them to develop substantially in the years to come. The return on such investments will be evaluated not solely in monetary terms, but also in terms of their potential effectiveness in addressing climate change.

Fifth—and most importantly—we will make new investments in our educational mission.

Ultimately, the most significant way that Williams can help address climate change—or any of humankind’s most pressing problems—is through the contributions of its graduates across all fields and in every part of the world. We are enormously proud of our alumni who are making a difference for the environment, working around the world in government, education, in the scientific and business communities, and in advocacy roles to address climate change.

Providing our students with the finest liberal arts education possible—helping them to understand the political, social, cultural, and economic strategies available and to develop the will and the sense of responsibility to undertake difficult challenges—remains our primary mission, so that we may continue to produce graduates who are active global citizens and effective leaders. To enhance our academic focus on this specific issue, we will:

  • Create and separately fund two new positions for faculty whose scholarship and teaching are in the areas of climate change science or related public policy. The positions would be located in the Center for Environmental Studies or other relevant academic units. The faculty Curricular Planning Committee will be asked to develop recommendations to the Committee on Appointments and Promotions for the specific fields of these new positions.
  • Make anthropogenic climate change a campus-wide theme of inquiry in the 2016-17 academic year. With the opening last spring of the Class of 1966 Environmental Center—and its pursuit of the Living Building Challenge—and the upcoming 50th anniversary of the Center for Environmental Studies, the time is opportune for a comprehensive, interdisciplinary program of activities that will address both scientific and public policy issues and, in so doing, inform the national conversation on climate change. The planning for this year of inquiry, to be called Confronting Climate Change, will begin this fall.

We believe that this set of actions, and the very substantial related investments, represent meaningful leadership on a critically important issue at a critically important time, and the type of leadership that we should all expect of ourselves and of our college.  While there are differing views within our community on how best to address climate change, ultimately all who are engaged in this issue share a common goal of ending climate change’s devastating effects on the environment.

Returning to the specific call for the college to divest the endowment from 200 companies identified as having the largest reserves of fossil fuels, the Board has made a number of additional determinations and decisions.

First, as of July 1, 2015, the college has no direct holdings of shares in any of the 200 companies identified in the divestment proposal, nor does it have plans to acquire any.

This is the result of a strategic decision, made several years ago at the recommendation of the Investment Committee of the Board of Trustees, to phase out direct holdings of securities in favor of investments in certain types of commingled funds.  Most other major college and university endowments are managed in the same way, but clearly it would be disingenuous to characterize this absence of direct holdings in any of the identified companies as divestment.

Second, the college will allow donors to make contributions to the college and employees to invest their retirement savings in fossil fuel-free or low-carbon funds and vehicles.

In light of the genuine concerns raised by divestment proponents and in an effort to respect the wishes of signatories to the petition, we will:

  • Establish a designation within the Alumni Fund and Parents Fund enabling members of the Williams community to contribute directly to current and ongoing infrastructural and curricular investments in sustainability, such as those detailed in this statement.
  • Establish a dedicated fossil fuel-free investment fund, held parallel to the endowment, to which donors may direct major gifts beyond their annual Alumni Fund and Parents Fund contributions.
  • Identify a low-carbon vehicle within the TIAA-CREF plan in which our employees may choose to invest their retirement savings.

Third, we have not chosen to include divestment, as called for by the petitioners, as part of the college’s response to the challenge of climate change.

The Board believes that it is important to share several of the fundamental reasons for this decision. As noted above, the advocates of divestment have fundamentally changed the nature and the urgency of the college’s engagement with this issue. However, we believe that divestment itself is a largely symbolic strategy, with little likelihood of having a substantive impact on the economic or social forces responsible for climate change, or on the political decisions that are necessary to address it. Further, while this is by no means solely a financial issue, to fully adopt the actions called for by the divestment proposal would involve expected costs of a magnitude that would, if realized, compromise our ability to achieve our core mission, again for uncertain gain.

If the act of divestment is largely symbolic, the cost of actually committing to divest the college’s endowment from the stocks of fossil fuel producing companies, whether held directly or indirectly by our outside managers, is concrete and potentially enormous. Importantly, this is not because these stocks are themselves good or bad investments, nor because we can know that investing in fossil fuel-free funds would result in lower returns.  Rather, complying honestly with the divestment mandate would require the college to change fundamentally its core investment strategy.

The endowment is invested almost entirely in commingled funds that are generally limited in size and in high demand. The managers of these funds will not accept investments from Williams, or from any other investors, that involve the sorts of restrictions contemplated by the divestment proposal. To comply with the divestment mandate, therefore, the Board would have to direct that most of the current holdings of the endowment be liquidated and that the portfolio be reinvested in vehicles that historically have not produced returns equivalent to our current approach.

The initial cost of divestment would be in liquidating the portfolio which, even done in an orderly fashion over the course of a year, would cost $75 million or more. The ongoing—and more severe—cost of divestment would be the result of the lower financial returns we would anticipate from changing so significantly our strategy for managing the endowment. Today, we seek to invest in a portfolio of high-performing commingled funds managed by firms that we have carefully determined to be among the best in the world; changing that strategy to accommodate the divestment objective would require investing instead either in direct holdings of individual company securities, which the Board has determined previously is not prudent, or in funds managed by investors with whom we have previously chosen not to engage. The historical evidence is that the cost of this change in investment strategy might be expected to total tens of millions of dollars of foregone investment returns each year. This impact would be true of divestment of any kind, not just divestment from fossil fuel-holding companies; the expected cost to Williams of divestment has nothing to do with projecting whether the particular class of targeted companies are themselves good or bad investments, and is entirely a result of the expected cost of fundamentally changing the college’s strategy for managing the endowment.

Just as it is irresponsible for us to leave future generations to deal with the devastating effects of climate change, it would be profoundly irresponsible of us as stewards of this 220 year-old college to burden future students, faculty, and alumni with the expectation of such severe financial constraints and consequences.

We want to again express our gratitude for the determined advocacy of many students, faculty, staff, and alumni that has catalyzed the development of the college’s ambitious response to the challenge of global climate change. We look forward to working with the college community to demonstrate leadership among institutions of higher education in addressing climate change, and to the college’s deep continuing engagement with the broader community on this important issue.