Trustees could invest in SRI

Members of the student-led Advisory Committee on Socially Responsible Investing (ACSRI) have submitted a proposal to the Board of Trustees to invest one percent — approximately $7.5 million — of the College’s endowment on sustainable ventures.

The program’s tentative name is the Green and Blue fund, based on the belief that if Middlebury invests in green funds, it can spend more on blue — Middlebury — ventures.

According to the proposal, which will be reviewed at the Trustees’ meeting this weekend, the fund will favor “companies with products that solve environmental problems as well as companies that have worked to reduce the environmental externalities of their operations.”

The ACSRI has suggested two mutual funds that meet these criteria: New Alternatives Fund (NALFX) and Winslow Green Growth Fund (WGGFX).

NALFX, which focuses its investments in green energy, such as wind, solar and geothermal power, has consistently outperformed the Russell 2000 Growth Index over the past five years, a commonly used benchmark for mutual funds.

WGGFX, which invests more broadly in green initiatives, has performed less consistently. The investment research company Morningstar notes its high volatility, exemplified by “enormous losses … more than nearly all its peers—in the late-2007 to early-2009 equity meltdown.”

Looking at the past 12 months alone, however, WGGFX has outperformed both NALFX and the Russell index.

Morningstar gives WGGFX a one out of five rating, while NALFX gets three stars out of five for its low cost structure and experienced management.

The ACSRI recommends NALFX over WGGFX, despite its acknowledgment in the proposal that NALFX’s focus on exclusively alternative energy could be problematic as such success “may not continue into the future.”

Members of the ACSRI are confident that the Blue-Green fund will show returns comparable to or just below those currently invested in by the College.

They are also hopeful that the fund, which if created could be donated to directly, will spur alumni giving, especially among younger alumni interested in the

College’s green initiatives.

ACSRI President Olivia Grugan ’12 emphasizes that this fund is about more than money. If Middlebury is truly dedicated to sustainable practices, she said, it must end the contradiction between its values and its investments.

“The creation of a sustainability fund within the endowment would be a first step toward more accountability in our investments,” Grugan wrote in an e-mail.

Max Odland ’12 encourages the passage of the proposal, citing the importance of maintaining the College’s image of sustainability even as it plans broad strategic reform.

“Dropping sustainability simply because of a financial crisis could do a lot to harm the College’s image,” he wrote in an e-mail.

Odland also noted the College’s “D” rating in endowment transparency in the 2010 “Green Report Card,” an annual, independent evaluation operations and investments at 300 colleges and universities.

Amherst College earned an “A” in the same category for its “list of external managers, mutual funds and equity holdings available online to all members of the school community,” according to the Green Report Card’s 2010 evaluation.

Bowdoin College and Williams College received scores of “F” and “C,” respectively.

Scholar-in-Residence in Environmental Studies Bill McKibben sees the benefit such investment can have in creating a “green future.”

Investors can “vote their proxies in the environmental battles being fought by shareholder groups interested in preventing global warming — these are effective, no-cost ways of nudging big firms in the right direction,” McKibben wrote in an e-mail.

Administration officials familiar with the proposal, including Chief Financial Officer Patrick Norton, who is acting as the primary liaison for the Trustees’ Investment Committee, declined to comment on the ongoing review of the ACSRI’s proposal.