College & University Endowments and the Principles for Responsible Investment: Aligning Investment Practices with Mission & Values
We invite you to join an upcoming webinar to learn about the steps university endowments are taking to address sustainability issues in their investments, and how this fits with their roles as long-term investors.
Signatories of the American College & University Presidents’ Climate Commitment (ACUPCC) and other institutions with commitments to climate action and sustainability are increasingly confronting questions related to if and how to better align endowment investment practices with institutional mission, values, and goals.
This webinar will provide an overview of the sustainable investing landscape and the spectrum of strategies available. It will highlight the Principles for Responsible Investment (PRI), and offer insights from university representatives who have experience with PRI.
Date: September 16, 2014
Time: 8:30AM PT / 11:30 am ET
Duration: 1 hour
- Sonal Mahida, US Network Manager, Principles for Responsible Investment
- Dave Gorman, Director of Social Responsibility and Sustainability, University of Edinburgh
- John Pierce, Assistant Treasurer, Simon Fraser University
- Georges Dyer, Coordinator, Intentional Endowment Network
The Billion Dollar Green Challenge -- an initiative of the Sustainable Endowment Institute that promotes green Revolving Funds (GRFs) on college and university campuses -- was featured on NPR's Marketplace this morning.
In the interview, SEI Executive Director, Mark Orlowski, explains how endowments can invest in GRFs as part of their investment strategy without worry about donor restrictions on the funds. Done properly, these investments can help campuses avoid substantial costs by upgrading to more efficient technologies and improving design to lower demand for energy. Over the years, these savings can add up to significant returns on the original investments -- Harvard is saving $5 million a year as a result of their GRF projects.
Listen to the 2 minute interview on Marketplace's website: How to grow green energy along with endowments.
Visit www.greenbillion.org to more about the Billion Dollar Green Challenge and the 43 institutions that are participating to date.
Endowments have a timely opportunity to express their support for strong action on climate change by signing the 2014 Global Investor Statement on Climate Change.
The Statement comes at a pivotal moment. As part of a global effort to mobilize action and ambition on climate change, United Nations Secretary-General Ban Ki-moon is inviting Heads of State and Government along with business, finance, civil society and local leaders to a Climate Summit in September 2014.
The 2014 Global Investor Statement on Climate Change represents an important contribution by the global investment community to supporting the UN Climate Summit and encouraging strong domestic and international climate and clean energy policies. The Statement sets out steps that institutional investors (both asset owners and asset managers) can take to address climate change, and calls on governments to support a new global agreement on climate change by 2015, in addition to national and regional policy measures.
The Statement was drafted through a collaboration of six organizations: the Asia Investor Group on Climate Change (AIGCC), the Institutional Investors Group on Climate Change (IIGCC), the Ceres Investor Network on Climate Risk (INCR), the Investor Group on Climate Change Australia/New Zealand (IGCC), the United Nations Environment Programme Finance Initiative (UNEP FI), and the United Nations-supported Principles for Responsible Investment (PRI).
The deadline to sign the Statement is 15 September 2014. Please note there is no cost to sign the Statement, and no further actions are required of signatories. The text of the Statement can be downloaded here (pdf) and endowments can sign by completing this form.
Don Gould, trustee and chair of the investment committee at Pitzer College, published an article in the Chronicle of Higher Education the other day outlining their rationale for divesting from fossil fuels.
He shares their responses to some of the most common concerns regarding divestment, including those related to:
- Fiduciary duty & financial performance
- Impact on fossil fuel companies
- Hypocrisy of continuing to use fossil fuels
- Sacrificing investment returns
- Commingled funds
- Politicizing the endowment
Regardless of your views on divestment, the piece is well worth the read. It is available here.
Chris McKnett, Head of ESG Investments at State Street Global Advisors wrote the following article: The Fossil-Fuel-Free Portfolio (pdf), outlining a few of the options and scenarios investors might consider related to climate risk and fossil fuel divestment.
This excerpt provides a review of climate policies around the world, the 'carbon budget' and stranded asset risk, and a spectrum of the carbon intensity of major energy sources.
A high-level, bi-partisan group of leaders from business, finance, academia, and government released the Risky Business report today. The group is co-chaired by Michael Bloomberg, Hank Paulson, and Tom Steyer, and the Risk Committee membership includes University of Miami President Donna Shalala, former US Secretary of the Treasury Robert Rubin, Former US Senator Olympia Snowe, among others.
They are calling on American investors and business leaders to "get in the game" to minimize the risks climate change poses to our businesses, communities, the economy, and our way of life.
On Sunday, Henry Paulson published an opinion piece in the New York Times ahead of the report's launch, titled "The Coming Climate Crash: Lessons for Climate Change in the 2008 Recession."
In it he draws parallels between the 2008 financial crisis and the climate crisis currently unfolding. He writes: "viewing climate change in terms of risk assessment and risk management makes clear to me that taking a cautiously conservative stance — that is, waiting for more information before acting — is actually taking a very radical risk. We’ll never know enough to resolve all of the uncertainties. But we know enough to recognize that we must act now."
He concludes, "We’ve seen and felt the costs of underestimating the financial bubble. Let’s not ignore the climate bubble."
This coalition of highly experienced and credible leaders highlighting climate risk and calling for action from the business and investment communities to support a price on carbon is another important signal of the importance of considering climate and other ESG criteria in the investment process.
A video of the press conference held this morning is available here:
The following is an op-ed piece written by Susan Gary, Professor of Law at the University of Oregon, and originally published on April 27, 2014 in the Eugene Register Guard.
The recent University of Oregon student vote on divestment raised the question of whether the University of Oregon Foundation should remove investments in fossil fuel companies from its portfolio. If the goal is to take action to address climate change, the vote focused on the wrong thing. Simply screening out the stocks of certain companies is not likely to have a substantial impact on those companies, and doing so may result in negative effects on investment performance.
Environmental, social and governance (ESG) investing (also called impact investing) is a better way to use endowment assets to address problems like climate change. The UO Foundation is already a leader in national efforts to increase the use of ESG investing by university endowment funds. Last spring the UO Foundation became the first foundation connected with a PAC-12 university to adopt an investment policy incorporating ESG factors.
The question for foundation managers and for people concerned about climate change is how best to harness the power of endowments. Empirical studies in the past few years have demonstrated that using ESG factors in investment decision making can improve a portfolio’s performance. The investment decisions then have two salutary effects: addressing environmental or social problems while also increasing returns on the investments.Read more
What is an “intentionally designed endowment”? On April 3-4, 2014 Second Nature and Hampshire College – with support from a high caliber Steering Committee – convened a group of representatives from endowed institutions and the finance industry to explore this question.
We developed a primer for participants to establish a baseline understanding of key issues related to aligning investment practices with institutional values. It provides a high-level overview of sustainability investing, including a brief history, and a select list of key resources and relevant organizations.
While we are all aware of the fossil fuel divestment movement – which has been instrumental in bringing increased attention to endowment investment practices – this was not a meeting about divestment.
We learned about the broad range of socially responsible investing (SRI) and environmental, social and governance (ESG) investing strategies now available, many of which now have long track records with performance equal to or better than conventional investment approaches. We heard from investment professionals about a range of implementation strategies for aligning investment practices with institutional values. A panel of legal experts clarified the issues of fiduciary responsibility as they relate to integrating ESG criteria into investment decision-making.
Risks and opportunities related to environmental challenges, social issues, and corporate governance are increasingly relevant to investment portfolios as society’s sustainability challenges become more acute. Non-profit endowments have a tremendous opportunity to avoid losses and maximize returns, while better aligning their investment practices with institutional values.