Could Environmental Sustainability = Financial Sustainability

Monday, July 22, 2013

a scale balanced between a leaf and a stack of money

There was once a time when university campuses where funded almost exclusively by land endowments.Some noble person would bequeath a plot of land to a university in the hopes of providing a place for education to flourish. These parcels of land were typically enormous, and small sections of the land could be sold or leased for a profit. In this manner, the institution would be able to pay for the cost of operating their institution. Need to hire more profs, sale a patch of land over in the East corner. Need to build a new library, log some of the forest and make a profit from the timber. And thus an institution could thrive perpetually on the land endowed to them.

But, the world changes and gone are the days of land endowments functioning as the sole money generator for universities. Today, most endowments are financial in nature and are vulnerable to the whims of the market and political popularity. If the market slumps, universities have less operating funds. If the government tightens their belts, the universities have to do the same. So consider this excerpt about the financial sustainability of universities (Academica Group)

CFO survey reveals negative outlook on financials
A new survey has found that many chief financial officers of universities and colleges are doubtful about the financial sustainability of their institutions. Only 27% of CFOs express strong confidence in the viability of their institution's financial model over 5 years, and that number drops in half to 13% when they are asked to look further over a 10-year period. Also, more than 6 in 10 CFOs surveyed disagree or strongly disagree with the statement that "reports that a significant number of higher education institutions are facing existential financial crisis are overblown." 
... many CFOs believe that new spending at their institutions will come from re-allocated funds rather than new dollars, and nearly half of CFOs say their institution has increased its dependence on debt to finance projects. ~ Inside Higher Ed

Admittedly, a lot of this data was pulled from U.S. institutions so not everything here is transferable (although it isn't too hard to find similar worries in the Canadian system). Nevertheless, there are a couple of things that are worth unpack from this statement. One, nobody is very optimistic about the state of academic institutions. Two, things don't look particularly good in the long run. Three, many institutions are looking to cut rather than grow.

The first thing that might come to some one's mind after reading an article like this is that the future is nigh. I look at this and think, "What an amazing opportunity for SUSTAINABILITY!" I assure nothing is wrong with my brain, but I can say that after being in this sustainability gig for the last couple of years, I know a good opportunity when I see one.

I am sure by now that you have pieced together that I want to make an argument for sustainability as a means of reducing capital and operations costs, all while improving the quality of life of those on and around the campus community. The Inside Higher Ed article mentions a few of the popular strategies that CFOs are pursuing, including using technology to reduce instructional costs, centralizing/consolidating administrative functions, and increasing teaching loads for full-time faculty.
I have a couple of examples from the University of Ottawa that I think might demonstrate how universities can pursue a triple bottom line approach to solve some of their problems.

Example #1 - Sustainable Transportation
Parking spaces are expensive no matter how you cut it. The capital costs of creating parking spaces range from $15,000 to $40,000 for an urban campus such as uOttawa (for the moment, let's ignore the crippling operational costs). And parking comes at the expense of valuable land so any program that manages the need for transportation already has a big incentive behind it. Implementing a program such as the U-pass lifts the burden of creating parking infrastructure. Installing bike racks costs a fraction of what you would need for a parking space and has the added benefit of encouraging active transportation (Incidentally, in the article featured above, health care concerns were noted as a rising issue for CFOs).

Example #2 - Deep Energy Retrofits
Harvard University is one of the pioneers of making deep energy retrofits a viable investment for universities, with some of their energy retrofits reporting a 30% ROI. This is a lesson that uOttawa has learned well. Recently, the first round of deep energy retrofits was completed, a $9 Million investment which repaid itself in 4 years and is generating annual savings of $2.8 Million on an on-going basis. Another two rounds are planned for the near future. An added benefit of these deep energy retrofits is the differed maintenance that you also get to knock off your list.

Example #3 - Waste Management
There's gold in them ther' landfills! I recently had a conversation with a local waste hauler about the profitability of recycling different streams of waste. His answer to me was, "We don't take any government subsidies, we don't get any grants, and if anyone thinks that garbage is a losing game, then brother... they don't know nothing." Waste hauling costs aren't going anywhere but up and with university campuses rivaling the population of small cities, there is tremendous risk in not managing one's waste. A proper waste management plan can even help turn a profit (this past year we saved tens of thousands of dollars by broadening our metal recycling program).

A university's primary mission will always be teaching students and conducting research. However, the shadow cast by economic turmoil is causing real concern for the long-term sustainability of institutions. In this light, universities will have to cut resources and if that's the case, why not cut "waste" in a manner that makes our institutions stronger. Then, perhaps we can have a conversation about institutions increasing their products and services to create new revenue (and maybe these can be sustainable products as well).

~ jON - campus sustainability manager
photo credit - jonathan rausseo

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