Bottom-Line Appeal

Energy efficiency is “not very sexy,” says Mark Orlowski, founder and executive director of the Sustainable Endowments Institute. Insulation lacks the visibility and high-tech appeal of solar panels and wind turbines. Still, energy efficiency is the first and easiest step toward saving money and helping the planet. “In the global field of sustainability, it’s always efficiency first,” says Susan Kidd, director of sustainability at Agnes Scott College.

To jumpstart efficiency projects, the Sustainable Endowments Institute launched the Billion Dollar Green Challenge (The Challenge) in October 2011, specifically aimed at colleges. This is a vigorous investment strategy with a whopping average annual return-on-investment of 32%. With an expected payback time of three to four years, “energy efficiency is a slam dunk compared to renewables,” Orlowski says.

The Challenge envisions $1 billion invested by colleges. It could lead to far more; annually, across all sectors, a breathtaking $279 billion worth of energy efficiency investments are available, enough to save more than a trillion dollars a decade, according to a Deutsche Bank/Rockefeller study. Colleges will thus be at the cutting edge of vast savings, not only in dollars but in reducing carbon emissions. Says Orlowski: “Universities have a unique opportunity and also obligation to be leaders in our society.”

Colleges Join In

Green Challenge. Credit: Paul Geffern, FlickrCCThe Challenge has already enlisted 42 institutions, representing $88 million in investments, from California to New York, from Georgia to Canada, including Harvard and Stanford as well as smaller colleges like Lethbridge and Catawba, to set up revolving green funds.

These revolving funds are self-sustaining—money saved from their investment is reinvested in future energy efficiency initiatives. The seed money comes from a variety of sources—outside investors, alumni donations, student fees, cash reserves. The size and scope of the program is tailored to individual colleges. The University of Vermont has just become the biggest investor, at $13 million, beating out Harvard University’s $12 million.

Vermont’s interest is no surprise—beyond Ben and Jerry’s, it is a state noted for an outdoor, environmental ethic. “The University of Vermont has been considered on the leading edge of sustainability for quite a while now,” says Gioia Thompson, director of the school’s Office of Sustainability.

She notes that it’s difficult to get donors for such low-visibility projects as insulating buildings. So the financial administration “identified another potent source” says Thompson. They simply took the money out of cash in hand, largely from student tuition. Payment in the spring and fall otherwise “sits waiting for expenses,” generating very little interest. Since the savings for energy efficiency are higher than the interest rate, it made sense to invest it in a green revolving fund.

A Green Education

The University of Vermont is setting a 5% minimum return on investment with a seven year payback or less. Because their energy efficiency program began in 1990, UVM has already completed the easiest projects. Their savings will therefore be much lower than the 32% for universities just starting out. “If we could find that kind of return on investment,” says Thompson, it would mean “we hadn’t been doing our job for the past 25 years.”

The new revolving fund will begin with lighting projects. The campus will be moving to LED, the technology likely to replace CFLs. Other projects involve heating, cooling and ventilation, which will “happen in conjunction with major renovation,” explains Thompson.

Other schools joining the Challenge are newer to green investment. Agnes Scott College, a women’s liberal arts school in Decatur, Georgia, with under 1,000 students, was a charter member. In 2007, the college adopted a new strategic plan with a strong environmental focus. President Elizabeth Kiss explains that sustainability is “linked to our mission as a core commitment.”

Agnes Scott has moved quickly, adding a management system that puts 73% of waste into recycling or compost, compiling a greenhouse gas inventory and constructing a LEED-certified building. It’s also worked to change student behavior through carpooling, temperature regulation and such simple measures as turning lights off.

Because Agnes is “a lot smaller than other schools” involved in the Challenge, “the billion dollar number was kind of scary for us,” says Kiss. She cites the need for “a certain amount of outrageous ambition”; the school has committed to $1 million for the revolving green fund, and has so far raised $400,000.

They have done so mainly through alumni donations. The high return on investment appeals to “hard-nosed donors who are really concerned about the costs of higher education and want us to be educating financially savvy students,” says Kiss.

The money will be targeted at lighting, heating and air conditioning projects. “I feel we’re building a cadre of Agnes Scott students,” Kiss says. “You can’t graduate from Agnes Scott now without a green pledge.”