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Posted on Nov 2, 2015

Innovative Path for Endowments to Move Beyond Divestment

endowmentUniversity Endowment funds are under pressure to divest of fossil fuels. One strategy can help relieve the divestment pressure while at the same time counteract the carbon footprint of some or all of the campus. Many universities can accomplish this with a small portion of the endowment fund. The fund would maintain this dedicated portion as an interest bearing asset. An asset with the added value of measurable sustainability.

The amount of capital required to finance a change to a low carbon economy and keep global average temperatures below a 2 degree Celsius rise by 2050 is $44 trillion. This estimate from the International Energy Agency. The payback is $115 trillion. Much of that capital will be raised in the form of green bonds. Many of these bonds voluntarily adhere to requirements from organizations such as Climate Bond Initiative and Green Bond Principles that certify the projects reduce greenhouse gases.

Pricing these investments in units that match the cost of a ton of greenhouse gas provides an opportunity for the investor to measurably offset their carbon footprint with an investment in clean energy. To counteract 1000 tons of a University’s carbon footprint the fund would invest in 1000 units of the certified bond. This added value can help endowments funds go beyond divesting and “Green” the campus.

A few examples of what it would take to offset the entire campus footprint using $40/ton for the price of carbon.

University Endowment Emissions in Metric Tons Cost to Offset per Year Percent of Endowment
University of Pittsburgh $3,492,839,000 268,500 $10,740,000 0.307%
Fordham University $675,100,000 31,971 $1,278,840 0.189%
Loyola University Chicago $539,719,000 79,413 $3,176,520 0.589%
Harvard University $35,883,619,000 200,000 $8,000,000 0.022%

Not all endowment funds will be able to offset the entire carbon footprint of the university but they can do a portion. In doing so they will still have an investment and they will demonstrate quantitatively the university’s commitment to sustainability. A 2015 Princeton Review survey of teens statement: “61% told us that having information about a school’s commitment to the environment would influence their decision to apply to or attend the college”.

The method of quantitatively offsetting one’s carbon footprint with investments in clean energy was developed by Carbon Xprint.

Ask your university to balance it’s carbon footprint with Carbon Xprint.