| Overall Rating | Silver - expired |
|---|---|
| Overall Score | 49.02 |
| Liaison | Carolyn Shafer |
| Submission Date | March 6, 2020 |
Pratt Institute
PA-9: Committee on Investor Responsibility
| Status | Score | Responsible Party |
|---|---|---|
|
0.00 / 2.00 |
Carolyn
Shafer Director Center for Sustainable Design Strategies |
"---"
indicates that no data was submitted for this field
Does the institution have a formally established and active committee on investor responsibility (CIR) or equivalent body?:
No
The charter or mission statement of the CIR or other body which reflects social and environmental concerns or a brief description of how the CIR is tasked to address social and environmental concerns:
Pratt has a Sub-Committee on Investments. This Sub-Committee recommended in 2016 specific actions on fossil fuels that are included in full in the "Examples of CIR actions during the previous three years" section below.
Does the CIR include academic staff representation?:
---
Does the CIR include non-academic staff representation?:
---
Does the CIR include student representation?:
---
Members of the CIR, including affiliations and role:
The Sub-Committee on Investments is chaired by Mike Pratt (Vice Chair of the Board of Trustees) and includes Howard Stein (Treasurer of the Board of Trustees).
None
Examples of CIR actions during the previous three years:
March 8, 2016
TO: Members of the Board of Trustees of Pratt Institute
FROM: Mike Pratt, Chair, Sub-Committee on Investments
RE: Statement on Fossil Fuel Investment Policy
The Sub-Committee on Investments, chaired by Mike Pratt and including Howard Stein, has
worked with its consultant, Clearbrook, as well as several other investors and thinkers in the
field, to respond to the specific request from Pratt Institute’s Student Government and its senior
administrators that we take action to reduce or eliminate our investments in fossil fuels, and to
the Sub-Committee’s own concerns about the environmental and economic consequences of
climate change. Institutions with assets totaling $3.4 trillion —from public employee pension
funds and sovereign wealth funds to universities and foundations—have pledged to divest, with
more stepping up each day. While our proposed commitment stops short of full divestment, we
believe that our more comprehensive path will substantially maintain our investment
performance and is actually a better response to the threat of climate change. While the
Committee members may differ on whether the commitment will help or hurt performance in the
long run, there is the agreement that any diminution will be modest and reflective of a prudent
exercise of our fiduciary duty. We plan to move carefully and slowly, seeking out excellent
managers in line with our guidelines.
We ask the Board of Trustees of Pratt Institute to approve the following policy statement:
Statement on Fossil Fuel Investment Policy
Acknowledging the clear existential threat of climate change, and the beginnings of a global
response that will in all likelihood include a price on carbon, strengthened Greenhouse Gas
(GHG) emission restrictions, and perhaps most importantly technological innovations that will
dramatically transform and reduce the use of fossil fuels, the Board of Trustees of Pratt Institute
is committed to reducing and possibly eliminating its fossil fuel investments, defined broadly.
Pratt Institute’s Student Government and its senior administrative staff have proposed a complete
divestment from the Carbon Underground 200, or top 200 owners of fossil fuel reserves. Those
investments are currently less than 3% of our total endowment, which is currently valued at
somewhat less than $150 million. While recognizing the political saliency of that standard,
around which the Divest/Invest movement has coalesced, the Board, on the advice of it
Investment Sub-Committee, believes that a more comprehensive approach that looks at overall
carbon intensivity is preferable, both from an environmental and an investment perspective. In
addition to owners of fossil fuel reserves, such an approach looks at sectors, such as utilities, oil
and gas exploration and transportation, which don’t own significant reserves, but that actually
play a significant part in GHG emissions. Pratt Institute will however fully divest itself of all
coal company equities reflecting environmental concerns and financial prudence
The Board’s first responsibility is as a fiduciary of Pratt Institute. A significant part of that
responsibility is the sound investment of Pratt’s endowment, to ensure that funds are available
for current and future student scholarships and other needs. It is extremely difficult to predict the
effect of reduced investment in fossil fuel and/or GHG intensive companies. Any reduction in
the diversification of Pratt’s investments—including the exclusion of carbon investments--
would be presumed to have a modest negative effect. On the other hand, if one believes that
reductions in the use of fossil fuels are inevitable given the alternative—global environmental
degradation—and that carbon pricing, taxes, restrictions, and new technologies will eventually
reduce valuations of fossil fuel owning companies because these fossil fuel assets would be
“stranded,” their divestment would make sense from a purely financial, investment perspective.
New government guidance specifically accepts and encourages the examination of such
environmental issues in the exercise of fiduciary duty.
The Board recognizes the potential risks of carbon investment reductions, but believes that they
are both relatively modest and that the negative impact of these reductions appropriately
balances the burden between current and future generations. The heaviest economic blow could
potentially fall on the Pratt community of 30 years hence, when possible annual shortfalls in
investment performance have accumulated. But that is precisely the generation that is most at
risk if GHG emissions are not reduced.
The Board cautions its Pratt constituents that portfolio adjustment will be a slow process, taking
up to five years to achieve completely. Many of our current managers may be unwilling to adopt
such a mandate and will need to be replaced. At the same time, the Board anticipates that the
pace of technological innovation and the adoption of solar, wind, and other renewable
technologies will quicken, creating unanticipated opportunities to prudently invest in sustainable
energy and other areas critical to addressing climate change. The dramatic fall in the price of oil,
the expansion of natural gas, and other factors are both challenges and opportunities.
The Board wants to particularly thank its students for their concern and perseverance, and
specifically commits to providing yearly progress updates. The Board looks forward to
implementing portfolio changes that contribute to the preservation of a healthy climate, while
maintaining investment performance.
TO: Members of the Board of Trustees of Pratt Institute
FROM: Mike Pratt, Chair, Sub-Committee on Investments
RE: Statement on Fossil Fuel Investment Policy
The Sub-Committee on Investments, chaired by Mike Pratt and including Howard Stein, has
worked with its consultant, Clearbrook, as well as several other investors and thinkers in the
field, to respond to the specific request from Pratt Institute’s Student Government and its senior
administrators that we take action to reduce or eliminate our investments in fossil fuels, and to
the Sub-Committee’s own concerns about the environmental and economic consequences of
climate change. Institutions with assets totaling $3.4 trillion —from public employee pension
funds and sovereign wealth funds to universities and foundations—have pledged to divest, with
more stepping up each day. While our proposed commitment stops short of full divestment, we
believe that our more comprehensive path will substantially maintain our investment
performance and is actually a better response to the threat of climate change. While the
Committee members may differ on whether the commitment will help or hurt performance in the
long run, there is the agreement that any diminution will be modest and reflective of a prudent
exercise of our fiduciary duty. We plan to move carefully and slowly, seeking out excellent
managers in line with our guidelines.
We ask the Board of Trustees of Pratt Institute to approve the following policy statement:
Statement on Fossil Fuel Investment Policy
Acknowledging the clear existential threat of climate change, and the beginnings of a global
response that will in all likelihood include a price on carbon, strengthened Greenhouse Gas
(GHG) emission restrictions, and perhaps most importantly technological innovations that will
dramatically transform and reduce the use of fossil fuels, the Board of Trustees of Pratt Institute
is committed to reducing and possibly eliminating its fossil fuel investments, defined broadly.
Pratt Institute’s Student Government and its senior administrative staff have proposed a complete
divestment from the Carbon Underground 200, or top 200 owners of fossil fuel reserves. Those
investments are currently less than 3% of our total endowment, which is currently valued at
somewhat less than $150 million. While recognizing the political saliency of that standard,
around which the Divest/Invest movement has coalesced, the Board, on the advice of it
Investment Sub-Committee, believes that a more comprehensive approach that looks at overall
carbon intensivity is preferable, both from an environmental and an investment perspective. In
addition to owners of fossil fuel reserves, such an approach looks at sectors, such as utilities, oil
and gas exploration and transportation, which don’t own significant reserves, but that actually
play a significant part in GHG emissions. Pratt Institute will however fully divest itself of all
coal company equities reflecting environmental concerns and financial prudence
The Board’s first responsibility is as a fiduciary of Pratt Institute. A significant part of that
responsibility is the sound investment of Pratt’s endowment, to ensure that funds are available
for current and future student scholarships and other needs. It is extremely difficult to predict the
effect of reduced investment in fossil fuel and/or GHG intensive companies. Any reduction in
the diversification of Pratt’s investments—including the exclusion of carbon investments--
would be presumed to have a modest negative effect. On the other hand, if one believes that
reductions in the use of fossil fuels are inevitable given the alternative—global environmental
degradation—and that carbon pricing, taxes, restrictions, and new technologies will eventually
reduce valuations of fossil fuel owning companies because these fossil fuel assets would be
“stranded,” their divestment would make sense from a purely financial, investment perspective.
New government guidance specifically accepts and encourages the examination of such
environmental issues in the exercise of fiduciary duty.
The Board recognizes the potential risks of carbon investment reductions, but believes that they
are both relatively modest and that the negative impact of these reductions appropriately
balances the burden between current and future generations. The heaviest economic blow could
potentially fall on the Pratt community of 30 years hence, when possible annual shortfalls in
investment performance have accumulated. But that is precisely the generation that is most at
risk if GHG emissions are not reduced.
The Board cautions its Pratt constituents that portfolio adjustment will be a slow process, taking
up to five years to achieve completely. Many of our current managers may be unwilling to adopt
such a mandate and will need to be replaced. At the same time, the Board anticipates that the
pace of technological innovation and the adoption of solar, wind, and other renewable
technologies will quicken, creating unanticipated opportunities to prudently invest in sustainable
energy and other areas critical to addressing climate change. The dramatic fall in the price of oil,
the expansion of natural gas, and other factors are both challenges and opportunities.
The Board wants to particularly thank its students for their concern and perseverance, and
specifically commits to providing yearly progress updates. The Board looks forward to
implementing portfolio changes that contribute to the preservation of a healthy climate, while
maintaining investment performance.
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