A Lot Less Gold on the Road to "Greener" Pastures?

As all of you know, I am opposed to colleges spending money on things that are completely opposed to our mission of educating students at the lowest possible cost.

As I've said and will say again, save the world on your own time with your own money.

Perhaps Henry Kravis is putting his money where his mouth is.

The Chronicle of Higher Education reports what will happen with Mr. Kravis's nice, tidy gift of $75 million.

The building, to be called the Kravis Center, is scheduled for completion in 2010 and will include classrooms, research institutes, faculty offices, and the Office of Admission and Financial Aid. The building will incorporate sustainable design and “become both the literal and symbolic heart of our institution,” Claremont McKenna’s president, Pamela Gann, said.

I don't know the particulars of the negotiations that went into Kravis's $75 million gift. He may well have asked for a green building, given his private equity firm, KKR, struck a deal with the Environmental Defense Fund to promote "green portfolios."

If he did follow on the bandwagon, he'd simply be following in the footsteps of what some of the cognoscenti seem to cry out for nowadays, not the least of which is our very own Roberts Environmental Center, named after Kravis's cousin and business partner, George Roberts.

Obsessed with "sustainability," (read: anti-growth) they publish a list of socially responsible corporations that "take[] environmental and social matters seriously and acts responsibly" -- whatever that means.

Of course the real purposes of companies has always been to make a profit. The very organization of the firm itself is to lower transaction costs so that we might achieve that process faster. (Thank you, Professor R. H. Coase.)

So the real question is there anything to "social responsibility"?

According to the July/August issue of The American, "specific goals to reduce emissions led to a decline in stock prices." They cite this working paper by two Dartmouth economists, Karen Fisher-Vanden and Karin S. Thorburn.

How does that compare to the Claremont colleges?

Well, I admit I haven't fleshed this on out as much as I can, but I would image that if you think of endowment growth, dependent in large part on returns from the stock market, like the amount of money coming into a company than voluntary efforts to curb CO2 emissions might end up hurting the school as a whole.

In turn, this lead to higher costs for the students as college is already growing much faster than the rate of inflation, which in turn means that fewer students could afford attending college.

This pledge is probably more dangerous to our endowment and growth potential than it is for companies. While normal companies will do exactly the amount of P.R. necessary before they start to lose a profit, colleges are under no such pressures to cut costs and can therefore sign silly pledges such as this one.

Part of pledge that Gann signed calls for making at least two of these steps.

Adopting green standards for buildings;

Requiring ENERGY STAR certification for products purchased by the university;

Offsetting emissions due to air travel;

Encouraging public transportation;

Purchasing energy from renewable sources; and

Supporting climate and sustainability shareholder proposals through their endowment.

What signing this pledge ends up doing is making it politically okay for left-wing groups to pressure the administrators to "divest" from companies that get unfavorable "sustainable" reports from such groups as the Roberts Environmental Center. (Expect a post in the coming days about just how silly their most recent report, "Analysis of Sustainability Reporting of Fortune Companies in California," is.)

Pomona's President also signed the pledge and the recent efforts toward "share holder accountability" at Pomona during their anti-Coke meeting. I covered that silliness here. When do you think it will start coming to Claremont McKenna?