OTB Calls Out the Green Report Card
On October 27th, the Sustainable Endowment Institute published its “College Sustainability Report Card” awarding Brown University straight A’s, tying it for first in the nation. Among the categories graded were endowment transparency, investment priorities, and shareholder engagement. The letter attached below explains why we feel these grades are very misleading and problematic.
Dear Sustainable Endowment Institute,
As members of Brown University’s Open the Books Coalition for a Responsible Endowment, we are writing to you about the “A” grades Brown University received in endowment transparency, investment priorities and shareholder engagement. We believe that the Sustainable Endowment Institute is pivotal in keeping our university accountable for its investment policies. Therefore, it is of utmost importance that the Green Report Card accurately reflect Brown University’s investment practices. For a number of reasons, the Green Report Card fails do so.
In the first place, Brown’s committee in charge of making proxy votes hasn’t made a proxy vote in two years, since the University liquidated its direct stock holdings. It is clear that proxy votes are no longer a useful measure of Brown’s shareholder engagement or even of Brown’s investment priorities and endowment transparency. Furthermore, while proxy voting is an essential role for the socially responsible investor, the emphasis that the Sustainable Endowment Initiative gives it (one third of the survey relates to proxy voting) is unwarranted. As a whole, academia’s investment strategy has shifted almost entirely to putting endowments in the hands of external money managers.
Beyond the flaws of the emphasis of the questionnaire, there are a number of ways in which the university’s investment policies are misrepresented. Another section of the questionnaire asks universities to self-report if they have any investment policy provisions or use any investment managers that consider environmental/sustainability factors. Aside from the fact that this self-reporting is completely unverifiable for universities like Brown, whose actual holdings are entirely opaque, these investments are often little more than token funds. At Brown, for example, the Social Choice Fund, which meets these requirements, currently stands at $1.54 million dollars. This may sound like a lot of money, but it represents only 0.07% of Brown’s $2.2 billion endowment. Considering that it took two years of serious organizing to create this tiny fund, receiving an ‘A’ from the Sustainable Endowment Initiative for investment priorities seems like a joke.
Finally, SEI’s grading mechanism for endowment transparency seems entirely baffling when examining the actual descriptions of disclosure. Take, for example, a comparison between one of the lowest and one of the highest ranked schools on the Green Report Card. According to SEI, Wichita State University, just like Brown University, makes a list of all holdings available to trustees and some senior administrators while only asset allocation is made available to the general public. In fact, the only difference in the two schools is that Wichita State University does not make its shareholder voting record public, while Brown University makes these records available only to the school community. Considering that Brown no longer makes any proxy votes, we believe that the difference in grade between the two schools (an ‘A’ for Brown and an ‘F’ for Wichita State) is absolutely preposterous. Even Columbia, which actually discloses more information than Brown (making a list of equity holdings available to all school community members), bizarrely received a ‘B’ in the face of our ‘A’ grade. Moving away from comparisons, though, we question how a university like Brown could get an ‘A’ for endowment transparency in the first place. Brown University has such opaque investments that in many cases not even the Chief Investment Officer knows which companies we are invested in, thanks to the nondisclosure policies of many of our external money managers. As students, we have no idea what our university is invested in, which is incredibly frustrating, and has long been a point of contention.Overall, we think that the Sustainable Endowment Initiative uses questionable grading policies that do not accurately measure transparency if a university like Brown can receive an ‘A’ grade.
As students committed to promoting responsible investment policy, we would like to initiate a discussion about your grading policy. We think this dialogue is essential, not only because we believe our own university was misgraded, but also because we recognize the importance of the Green Report Card as a tool for holding our universities accountable for being truly responsible investors. We thank you in advance for beginning this conversation with us, and look forward to your response.
Sincerely,
Open the Books: Coalition for a Responsible Endowment
Brown Students for a Democratic Society
Brown Student Labor Alliance
Brown Students for Justice in Palestine
Brown Immigrants Rights Coalition
Filed under: Uncategorized | Leave a Comment
No Responses Yet to “OTB Calls Out the Green Report Card”