Green Rating Questioned

A new report by one sustainable investment advocate suggests one national ranking of sustainable campuses is often unreliable.

September 3, 2014

Colleges are routinely getting credit for complying with environmental standards they may not have met, a new report by the Sustainable Endowments Institute suggests.

The institute examined 178 colleges’ responses to a national rating system designed to measure a college’s environmental policies.

In about two-thirds of those cases, colleges submitted inconsistent or incomplete data to the Sustainability Tracking, Assessment & Rating System – but the colleges still got credit for complying with the system’s sustainability standards, according to the report.

The national rating system, known as STARS, is operated by the Denver-based Association for the Advancement of Sustainability in Higher Education. Many colleges boast of their good ratings from the association.

"It’s hard to dissect, well, who is responsible for that,” said one of the report’s authors, Mark Orlowski. He said some colleges may not understand the standards and that the STARS staff is short-handed so cannot audit the colleges’ reports.

STARS, which is planning a formal response to the report later in the week, has acknowledged it does not check all of the data or confirm all of the ratings on its website, but said it does make the data public so they can be reviewed, and that the institute's review of them is "one organization's interpretation of the data."

Colleges can get a green check mark – and a bronze, silver, gold or platinum medal – for their environmental practices from STARS by asserting they meet the system’s standards. But their reports are voluntary, self-reported and only spot-checked by ratings system staff.

The Sustainable Endowments Institute, which wrote the report, is backed by Rockefeller Philanthropy Advisors. The institute used to have its own report card, the College Sustainability Report Card – a project it has since ended.

The institute’s report is an extensive review of just one section of the STARS data, but it rings at least partially true to some people involved in the STARS project.

The ratings system gathers data on a wide range of campus activities, everything from investment practices to environmentally friendly curriculums to the prevalence of plants and wildlife on a campus.

The Sustainable Endowments Institute looked only at institutions that were seeking credits for their sustainable investment practices – 178 institutions that manage some $185 billion, according to the institute. Of those, the report found, 114 institutions received credit for practices that may not have complied with the STARS standards.

For instance, 46 claimed sustainable investment credits for shareholder advocacy, which is supposed to require colleges to file shareholder resolutions, write letters to companies in which it invests or exclude from its portfolio certain stocks. But, according to the report, eight of the colleges got credit for “only writing letters to their institution’s president or investment officer or letters to their fund manager.”

The sustainability ratings system also lets colleges take credit for transparency. The institute found 62 of the 88 colleges that claimed credit for transparency either did not make public their investment holdings or did not make public their shareholder voting record. Only five fully complied, according to the report.

Dave Newport, one of the co-creators of STARS, said the findings ring true to him and highlight longstanding questions about the system’s data.

“It’s been something that’s been on our mind from the beginning; we realized we didn’t have the support in terms of the infrastructure to demand third-party validation of the report from the get-go, so it started out as a voluntary process,” said Newport, who is no longer affiliated with the ratings system.

The University of Colorado at Boulder, where Newport directs the environmental center, is about to become the first university to submit a STARS report that has been reviewed by an outside firm, he said.

Even though Newport has a long history with STARS, the outside review turned up problems: Newport expected Boulder to receive an A+, but said what he got back was worth only a B+.

“Folks that are not as dialed into it, I think it would be difficult to not make a lot of errors that may go undetected,”  he said.

Meghan Fay Zahniser, the director of programs at the association that runs STARS, said colleges sometimes enter data incorrectly or don’t understand the standards they are being asked to meet.

“There’s human error, and that goes to what they’re actually entering and how they are interpreting what the credit is asking,” she said.

A major accountability feature is that all the data submitted is public. “We’re actually hoping that everybody – students – can take a look at what their institutions are claiming and hold them accountable,” Zahniser said.

Zahniser said a new version of the system, known as STARS 2.0, is more rigorous and easier to understand. Filings by colleges are also now getting a closer review.

But the Sustainable Endowments Institute’s report included a brief review of 18 reports submitted to the 2.0 system as of August already. It suggests colleges may still be getting credit for standards they have not yet met.

Bill Brown, the director of sustainability at Indiana University at Bloomington and a member of the STARS steering committee, said there are issues with the system’s data but there are also ways to fix them.

“There’s a process for reporting information that you feel is in error, and you can do that for anybody else’s report,” he said. “Anything that comes to light will be investigated and we do follow up,”

In some cases, the inconsistencies the Sustainable Endowments Institute finds in STARS’s data could create further debate about which policies qualify for credit and which do not.

In one such case, the report talks about an unnamed institution that, based on its review, improperly took credit in 2011 for having a student-managed socially responsible investment fund.

The report, which does not name names when it shames colleges for failing to clearly meet standards, said the college "reported on a committee for socially responsible investment that is not run by students, but instead allows students to review shareholder resolutions and make proxy voting recommendations. This committee also manages a portfolio that includes investment in Exxon Mobil and Chevron."

A search of the STARS reports makes clear the institution is Haverford College. In response, a Haverford spokesman said students did pick stocks and the point of picking Exxon Mobil and Chevron – along with Apple, DuPont, General Electric, McDonald's, Tyson Foods and Wal-Mart – was so the student-controlled fund could own shares and try to create "change from within.”

"The distinction might be expressed by the difference between supporting green companies vs. supporting initiatives that will make a company more green,” said Haverford spokesman Chris Mills in an email.

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