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Stanfords Endowment and Climate Change Lessons Learned from an Early Success

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Steve Schneider, climatologist, professor; and ... to split donation or direct entirely to SRI fund -- Steve Bing at Stanford. ... – PowerPoint PPT presentation

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Title: Stanfords Endowment and Climate Change Lessons Learned from an Early Success


1
Stanfords Endowmentand Climate ChangeLessons
Learned from an Early Success
  • Power Shift 2007
  • Aimée Christensen
  • November 3, 2007

2
Overview of a Case Study
  • Objective Get Stanford to adopt a climate policy
    governing the Universitys endowment stop
    corporate opposition to action on climate policy.
  • Strategy Work within the system, build support
    internally, engage with outside stakeholders.
  • Lessons Learned Third party validators are
    critical, credible metrics needed, and follow-up.
  • Recommendations Its about ethics and its
    about fiduciary responsibility, and alumni power.

3
What Governs Stanfords Investments?
  • The primary fiduciary responsibilityis to
    maximize the financial return... However, when
    the Trustees adjudge that corporate policies or
    practices cause substantial social injury, they,
    as responsible and ethical investors, shall give
    independent weight to this factor in their
    investment policies and in voting proxies on
    corporate securities.
  • -- Stanford Statement on Investment
    Responsibility Concerning Endowment Securities
    (1972)

4
What is Substantial Social Injury?
  • The injurious impact on employees, consumers,
    and/or other individuals, or groups resulting
    directly from specific actions or inactions by a
    company.
  • Company actions or inactions must be proximate
    to and directly responsible for identifiable
    social injury.
  • -- Stanford Statement on Investment
    Responsibility Concerning Endowment Securities
    (1972)

5
How to Adjudge Substantial Social Injury?
  • 1972 Investor Responsibility Research Center
    established by Stanford, others to research
    issues.
  • 1973 Stanford Trustees established predecessor
    to the Advisory Panel on Investment
    Responsibility (APIR).
  • APIR twelve members
  • Four faculty
  • Four students (two graduate and two
    undergraduate)
  • Two alumni
  • Two staff
  • APIR advises President and Trustees Special
    Committee on Investment Responsibility (SCIR).

6
What does the APIR Do?
  • Receives and researches allegations of corporate
    substantial social injury
  • human rights, labor, diversity, environment.
  • Too unwieldy to consider all resolutions
  • Develops policy recommendations
  • Proxy votes for shareholder resolutions
  • Engagement
  • Divestment
  • Recommendations presented to Trustees SCIR each
    year.

7
Case Study Climate Policy
  • Fall of 1998 joined as grad student member of
    APIR. Member of Environment Subcommittee.
  • Subcommittee assessed whether a topic arose to
    substantial social injury deserving research
    and recommendations for action
  • Reviewed resolutions on current proxy ballots
  • Egregious
  • Likely to reappear in future
  • Likely to appear frequently
  • No question that climate change met the standard.

8
My Strategy
  • Dont push Allow other members of the APIR
    Environment Subcommittee come to the conclusion
    that climate change was the top issue which at
    that time was not a foregone conclusion
  • Do the work They suggested I lead on research on
    the topic people are happy to have students do
    the work, and it puts the pen in our hand
  • Make the case I drafted the background statement
    with a great deal of emphasis on
  • clear scientific consensus (IPCC)
  • economic benefits of climate leadership and
    economic harms of inaction (1997 Economists
    Statement) and
  • growing corporate diversification of position
    (Pew Business Environmental Leadership Council).

9
My Strategy
  • Develop reasonable actionable policy
  • Obtain support of key third party validators
  • Don Kennedy, former President of Stanford during
    South Africa divestment campaigns, respected
    environmental studies professor
  • Steve Schneider, climatologist, professor and
  • Walter Falcon, APIR member, director of the
    Stanford Center for Environmental Science and
    Policy.

10
The Policy
  • Vote in favor of shareholder resolutions that ask
    companies to take realistically actionable and
    affordable steps to address greenhouse gas
    emissions i.e.
  • measuring greenhouse gas emissions
  • developing ghg reduction plans
  • reporting on significant climate-related actions
    by the company and
  • producing regular reports assessing potential
    material impacts due to corporate climate action
    or inaction.
  • Send letters of appreciation to companies who
    were leading on climate change by
  • tracking and reduce emissions
  • investing in, deploying cleaner, more efficient
    technologies and
  • acting in accordance with the four Pew
    Principles.
  • Engage companies in a dialogue regarding their
    position on climate, sent survey requesting
    information on corporate position, policies,
    methods of assessment, standards, any other
    information useful for our research.

11
The Wrinkle
  • While I worked within the system, outside NGO
    pressure arrived on campus.
  • Ozone Action / Green Corps wanted divestment from
    companies in Global Climate Coalition
  • I argued engagement, option of divestment
  • Agreed to work together to get student government
    endorsement of APIR policy
  • Outside pressure provided momentum and made the
    policy look like a good solution.

12
Making the Case to the SCIR
  • The Trustees Special Committee had to
  • Adjudge whether we had made our case that
    corporate action or inaction on climate arose to
    substantial social injury
  • Adjudge whether recommendations were reasonable
  • Decide whether to recommend adoption of
    recommendations to full Board of Trustees

13
The Verdict
  • Success! Why?
  • Strong background case, informed approach, and
    excellent third party validators and
  • SCIR Chair, Roger Clay, experienced from South
    Africa issue, pleased to be acting on issue of
    importance after much time of inaction.
  • SCIR provided excellent amendments.
  • Full Board of Trustees adopted it June 9 1999.
  • Roger Clay continued to play active role, signing
    letters to corporations w/ our survey.

14
Now for the Hard Part, Implementation!
  • First, benchmark companies climate performance
  • How to compare companies, even within sectors?
  • How to measure lobbying? Dollars spent, topic?
  • How to measure impact of climate inaction,
    particularly with no system of GHG reporting for
    comparison?
  • Developed our own system of evaluation and
    ranking based on responses to survey.
  • Used EPA industry segments with highest Clean Air
    Act penalties.
  • Relied on other information environmental
    compliance, sustainability, transparency.

15
Corporate Performance Criteria
  • Written climate policies, GHG measuring
    reporting
  • Voluntary emissions tracking reductions, energy
    efficiency programs
  • Compliance with environmental laws
  • Voluntary adherence to respected environmental
    codes and standards (CERES)
  • Proactive versus negative lobbying, PR, education
  • Relevant proactive, negative affiliations, ie
    GCC or Pew BELC, industry, governmental,
    educational research and support

16
Lessons Learned
  • Obtain third party validators
  • Gauge how best to involve campus community
  • Identify process for comparing corporate
    performance and
  • Establish clear follow-up mechanism to ensure
    university compliance beyond proxy voting.

17
Recommendations
  • Talk their talk Now use financial justification
    for climate action CERES, Marsh Insurance,
    Swiss Re, Lehman Brothers, JP Morgan Index.
  • Proactive investment More feasible now to call
    for green endowment investments, and to call on
    companies to use and invest in clean energy.
  • Have robust system for benchmarking Third party
    analysis, i.e. Carbon Disclosure Project.
  • Ensure implementation Create a reporting
    mechanism to Trustees on implementation.
  • Andif no action, then push for SRI endowment
    set-aside alumni and other donors can choose to
    split donation or direct entirely to SRI fund --
    Steve Bing at Stanford.

18
Questions?
  • Aimée Christensen
  • Email aimee_at_christensenglobal.com
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