As an alumnus from The New School’s graduate program in International Affairs and Economics, I was proud to hear of the big news that the Board of Trustees voted to move forward with an ‘Investment Committee’ to research the application of a Climate Change Action Plan. While this is not a solid victory, it’s not a defeat. The presentation in front of the board included two heavy hitters Terra Lawson-Remer, professor at The New School and former Senior Policy Advisor at the U.S. Department of the Treasury, and Bevis Longstreth, former SEC Commissioner.
Professor Lawson-Remer provided her comments to the board below.
The New School
Remarks to the Board of Trustees
Terra Lawson-Remer
Chair, Advisory Committee on Investor Responsibility
February 6, 2014
INTRODUCTION
● Hello, my name is Terra Lawson-Remer, and I am the chair of the
Advisory Committee on Investor Responsibility.
● It’s a pleasure to be here. Thank you to Joe, and to David, for the
opportunity to discuss the issue of climate change and The New
School’s fossil fuel investments with the Board of Trustees.
● The ACIR is a university-wide committee composed of faculty,
students, trustees, and administrators, appointed by the university
President. The committee was established by the Board of Trustees
in 2009, with the mandate to develop strategies to incorporate
consideration of human rights, environmental sustainability, equal
opportunity, diversity, and other issues at the core of The New
School’s mission, into the management of The New School’s
investments.
● Our committee occupies a special place in university governance—
we report directly to the Investment Committee, and our mandate is
to serve that committee, and the Board of Trustees. But as
representatives of various constituencies, we are accountable to the
university community as a whole.
● I have worked for over fifteen years on the environmental, social,
and governance aspects of investing – as a lawyer and an
economist, as an organizer and activist, as a U.S. treasury official in
this administration, and now as a scholar and professor. It’s a
privilege to bring this background to help guide The New School’s
engagement on these critical issues.
● Climate change is now THE existential threat facing this and all
1future generations. I hope that we, at The New School, can
continue our long progressive tradition of leadership on the central
moral issues of our times, and move quickly to take an unequivocal
stand on the challenge we all now face.
● You all have in front of you the ACIR’s six prong Climate Change
Action Plan, which I hope you’ve had an opportunity to read. I will
take a few minutes to review the proposal, and the reasons that the
university community has organized to advance this initiative.
● We present these recommendations in light of
– the urgent global challenges posed by climate change,
– The New School’s commitment to sustainability,
– and the concerns expressed regarding climate change risk by the
largest endowment-focused student movement in a generation.
CONTENT OF THE PROPOSAL
● The proposal has 6 prongs.
o The first four relate to disclosure of carbon-related risks—the
financial risks potentially posed to companies by their ownership of
oil, coal, and reserves of the other dirty energy sources that are
driving climate change.
o The fifth prong, included in the proposal at the request of some
members of the Investment Committee, and in response to input
from students and faculty, calls for The New School to invest a
portion of the endowment in alternative energy.
o The sixth prong is the most controversial, and the most symbolically
important—this calls for The New School to stop profiting from fossil
fuels investments that are leading the world down a very
unsustainable path.
● The first four prongs of the proposal, which have already been
endorsed by the Investment Committee, call for disclosure of all
carbon-related risks to companies’ asset values and revenues. In
this vein,
2o We will petition companies directly, as shareholders, for voluntary
disclosure;
o and petition the major government regulatory bodies, such as the
Securities and Exchange Commission (SEC), to pass mandatory
rules to protect our assets and interests as investors.
● The fifth prong proposes to allocate 2-5% of The New Schools’
endowment towards new technology alternative energy, in order to
align our investments with our university’s core mission and
commitment to sustainability, and foster the innovation that is the
key to a sustainable future.
● The sixth prong calls on The New School to divest from fossil fuel.
● Just last Tuesday, 17 foundations, controlling more than $2 billion in
assets, committed to divest from fossil fuel companies.
● These foundations join more than 50 cities, counties, and religious
institutions that have already divested from fossil fuels.
● Divesting now, today, will further The New School’s leadership
among institutions of higher education.
THE CASE FOR ACTION
Science Data on Climate Change
● As Hurricane Sandy made so clear last year in our own community,
the effects of climate change can be astonishingly destructive and
proximate. The best research on the future of the climate only
amplifies these concerns.
● This year, a landmark report by the UN’s Intergovernmental Panel
on Climate Change projected that by the end of the century, sea
levels could rise by over 3 feet, swamping coastal cities from
Bangkok to Amsterdam.
● In the coming two decades, we will see intensifying cycles of
droughts and floods that will threaten food security, water
3resources, and livelihoods, across Africa, Asia, Europe, and the
Americas.
● Much of what we are doing to the planet is irreversible—global
temperatures will remain at elevated levels for many centuries,
even if all carbon dioxide emissions ended today.
● The moment of prudence has passed; we have now entered the
moment of radical urgency.
Progressive Leadership
● Students are understandably aware of these profound threats, since
it is their futures at risk.
● The United Nations’ recent study on youth perception of climate
change found that, quote, “nearly 90 per cent of young people
across the globe think world leaders should do ‘whatever it takes’ to
tackle climate change.
● Students are also, the study found, more likely to become loyal to a
brand if they see that it is taking concrete steps to address climate
change.
● The New School has staked its reputation, and its appeal to
students in an increasingly competitive educational market, on a
longstanding tradition of progressive thinking and practice.
● From the University in Exile to the establishment of the ACIR, The
New School has long positioned itself as a leader on pressing real
world issues, most recently environmental sustainability.
● Yet, over the last year, the number of universities with sustainability
programs increased 400%. What was once progressive is now the
norm.
● If The New School were to divest today, it would be the largest
divesting University by endowment size by a factor of 9, reinforcing
our position as a leader among our peers.
4● But the divestment movement is gaining momentum on college
campuses. The number of small schools that divested from fossil
fuels jumped from 2 to 9 just last year.
● If we fail to act now on our fossil fuel investments, if we wait for
others to lead the way, we will be left behind.
Financial Argument
● I imagine there may be some concerns regarding the impact of
divesting from fossil fuels on The New School’s endowment returns.
This concern is understandable, but it is misplaced.
● The analysis provided by our financial advisors puts financial risks in
proper context. Our endowment’s exposure to fossil fuel assets, at a
mere 1.4% of the total Endowment portfolio, is remarkably low. And
if one looks closely at trends over the past five years, fossil fuel
divestment would have entailed reduced risk and increased returns.
● I will defer to Bevis to expand further on the significant regulatory
risks associated with continuing to hold fossil fuel investments, and
the bottomline costs of stranded assets.
● Divestment also creates space for the alternative opportunities we
propose to pursue. 2013, for example, was a record-breaking year
for green investments, with over $10bn of Green bonds issued. In
response to exploding demand, several major US banks announced
Green Bond issuances just last month.
● Granted, divestment is usually not the best approach to addressing
the frequent injustices generated by unethical business practices.
Divestment, in isolation, is generally unlikely to have any real effect
on share prices or company operations. But as part of a global
movement, and in a place like New York City, the impact will
resonate.
● I would like take us back to a comparable moment in history. In
1990, when the late Nelson Mandela was freed from prison, his first
foreign trip was not to the White House. His first trip was to the
5University of California, to thank the students who had moved their
university to divest from companies working under apartheid.
Working together, ethical investors helped overthrow the tyranny of
the apartheid regime. That is our mantle, and our legacy.
CONCLUSION
● Thank you again for the opportunity to present here today.
● The Climate Change Action Plan before you today outlines a clear
and coherent strategy to safeguard our planet and advance The
New School’s mission and ethical values, while enhancing our
financial position for the long-term.
● I look forward to answering questions during the Q&A, after all the
presentations.
● We will hear now from Bevis Longstreth, who needs no introduction.
We will then hear from our investment advisors, who will present
basic background information on the endowment, and then from
Benjamin Silverman representing the University Student Senate,
and Christopher Harris, speaker of the Graduate Faculty Student
Senate. Anne Adriance, Chief Marketing Officer, and Donald
Resnick, Chief Enrollment and Success Officer, will be available to
answer questions during the Q&A.