St. Lawrence’s endowment investing process is a complicated monetary maelstrom. First, a group of trustees scrape private donations into a large pile. Advisors and managers send this money into the world, sometimes going to pooled funds (which can contain hundreds of companies); the money comes back, usually with a higher ratio of Benjamins to Grants, and SLU uses 5.5% of the profits to offset the operating budget. On campus we can see the fruits of the money’s labor every day. Investment practices support financial aid, professors’ salaries and new buildings. The St. Lawrence education is subsidized for every student, even the ones paying full price. However, the investment cycle and the consequences of some of the school’s investments are not noticeable.
Keeping the complexity of the system in mind, Ryan Gillard and I met with President William Fox about green investing. Kathy Mullaney (treasurer and vice president of finance) told us several weeks ago, bluntly, that no clause existed of any kind to invest the endowment with human rights or environmental issues in mind.
Fox was less succinct. He explained that trustees are “widely and deeply experienced in the world of investment” and they are anything but cavalier about handling money donated to the university in good faith. Also, “The catastrophic event of collapsing credit markets” left many institutions worse off than St. Lawrence. This was a testament to SLU’s Schwarzenegger management muscles (or Ferrigno financial savvy, if you prefer). He extolled the trustees for their work hedging the school’s funds, diversifying, and mitigating risk in general. But the issue is very clearly not black and white and neither is it new.
Fox drew an interesting parallel to Major Barbara; written over one hundred years ago. The play follows an officer for the Salvation Army, morally struggling to accept donations made by an arms manufacturer and whisky distiller. Despite the fact that St. Lawrence is invested in companies like Exxon, Chevron and DuPont, Fox insisted that the trustees were operating with a moral compass. President Fox is new and has inherited a North Country Salvation Army; however, his reasons behind defending the trustees were unfounded. He said, “I know these people. They are avid readers of newspapers and magazines.” He explained that many owned houses in the Adirondacks. But since there is no written clause to support moral investing, the school cannot assume trustees will channel the money to support human and environmental-based companies.
Looking to the future, Gillard wanted to know what would happen if the trustees were all ecologists and climatologists instead of entrenched financiers. Would the hypothetical board consider peak oil or America’s unsustainable reliance on coal and change their investment portfolio? Fox, ever the level diplomat, explained, “responsible green companies may not be strong enough yet. They are still, largely, considered too risky; for every one that makes it, forty or so may fail.”
St. Lawrence commonly sites sustainability as one of its core values. However the ‘sustainable’ changes to campus all seem to be very tangible; green bikes, the Johnson Hall of science and local food events. Invisible systems are not as readily permeated. The school’s core values have not led trustees to change the endowment portfolio to contain a couple solid eco-friendly mutual funds like Winslow Green Growth Fund and the Calvert Global Alternative Energy Fund. A belief that occurs only on a visible, symbolic scale should not be considered a core value. Wal-Mart is apparently riding a similar wave. On walmart.com, CEO Mike Duke explains; “at Wal-Mart, we’re working to make sustainability sustainable.”
Is St. Lawrence just doing the same thing—piling vague initiatives on top of each other to garner the benefits? Is the school’s green fetish real or just college experimentation? Bearing in mind the complicated nature of endowment investing, the school’s portfolio is not upholding human rights and ‘sustainability’ as much as it could be.