This column excerpted from Intentional Endowments Network.
On September 27, 2019, an estimated 500,000 people, mostly high school, college and university students marched in a “climate strike” held in Montreal, Quebec. My two stepsons were among those led by Greta Thunberg. The Montreal event was not an outlier. These climate strikes occurred across North America and the globe. These young people are much like Ms. Thunberg; they are exasperated by inaction from us — Baby Boomers or “OK Boomers” as the students call us.
I think about this a lot from the perspective of a parent, Northland College trustee and a retired financial planner.
Future students will demand more action on climate issues because of the impact on their lives and those of their children. Indeed, it is happening already: Students at Northland College were agitating for change when I joined the board and partnered with them to lead the way to effectuate fossil fuel divestiture at our institution.
As a trustee and member of the Investment Committee at Northland, I refocused the discussion after a decade of conversation and inaction. Subsequent to much research on alternative investments that would meet acceptable performance goals, Northland’s endowment is now 100 percent fossil-free.
We concluded this was the right move from many perspectives — fulfilling our mission, aligning with our values, attracting the best students, and protecting our endowment capital in both the short- and long-term. We believe that fossil-free and other Environmental, Social, and Governance (ESG) investment strategies can reduce risk, and perform as well or better than “conventional” investment strategies.
A recent report found that 94 percent of foundations that committed to divestment five years ago have experienced positive or neutral impacts on their financial performance. The body of evidence supporting the financial case for ESG continues to grow, and Intentional Endowment Network’s website includes a library of studies and reports demonstrating this.
I expect this will not be the last time we move the portfolio toward greater responsibility given positive outcomes. Of note, Northland’s 2019 growth in fall enrollment exceeded all other private college and university trends in Wisconsin. In my opinion, this success is a consequence of Northland’s environmental and sustainability focus, as well as initiatives that “walk the talk.”
Some highlights of Northland’s sustainability achievements in this past year include:
- Added sustainable agriculture as an academic program;
- Built a “high tunnel” to extend the growing season for produce served in the campus cafeteria;
- Completed one-year inventory for the Real Food Challenge;
- Composted an estimated 170,000 pounds of food waste (a 77 percent increase from the previous academic year); and
- Northland College and its student association purchased 30 kilowatts of solar energy shares from the Xcel Energy Corporations’ Solar Connect Community Garden.
All these initiatives have prospective students, environmental organizations, and the press taking notice. Sierra Magazine, a publication of The Sierra Club, ranked Northland College 26th on its “Cool Schools” list of the eco-savviest colleges and universities.
Of the 282 schools Sierra considered, Northland rose up from 55 in 2018 to 26 in 2019, subsequent to divestiture. Northland was ranked sixth, up from 14th, among undergraduate colleges and remains first in Wisconsin and the Midwest.
In addition to the Sierra rankings, the Association for the Advancement of Sustainability in Higher Education named Northland College top in the nation for a sustainability curriculum. More than 80 percent of faculty incorporate sustainability into the classroom. Most recently, the Princeton Review’s “Top 50 Green Colleges” ranked Northland 16th.
Why is this important? According to a 2019 Education Advisory Board industry study titled, “Remaining Relevant Amidst Competitive Disruption,” college enrollment is predicted to decline by 14 percent from 2026-2029. Additionally, there are proposed federal and state-led free college initiatives that will potentially increase competition for the declining pool of prospective students.
It is time to be forward-thinking and approach other higher education boards to discuss divesting endowment portfolios from fossil fuels. The sooner we focus and listen to what our prospective students demand, the better — simply hoping the students will keep attending private colleges is not a strategy. Instead, action to divest from fossil fuels in the endowment portfolio is critical to both the existence of our colleges and to the planet.
Colleges that choose to avoid issues important to their audience and relevant to the management of our respective endowments, risk “withering on the vine” irrespective of portfolio performance.
Mike Fiorio is Northland College alumnus and a trustee, a 34-year veteran of the financial services industry, and a retired partner of Fiorio Wealth Advisors.