Higher Education Endowments and the Climate Crisis

 

By: Anthony D. Cortese, Sc.D., Co-founder of Second Nature, and Co-Founder and Senior Fellow of The Intentional Endowments Network

 

Humanity is at a crossroads without historical precedent. Current economic, social, and environmental trends are not sustainable.  Challenges related to climate change, water, food, economic inequality, poverty, and social unrest pose an existential threat to society. Witness the October UN Report on Climate Change and the National Climate Assessment released last month. 

We need a transformative shift in the way we think and act individually and collectively and higher education must lead the way in our role to provide the knowledge and the educated citizenry for a thriving civil society for the long term. Society looks to higher education to identify solutions to major problems, anticipating future challenges, and developing innovative strategies and models that will enable progress – to be a role model for what society might look like. 

Higher Education's rapidly expanding response to this challenge over the last two decades has been one of the most positive and inspiring societal trends, e.g., the 600 colleges and universities that are part of the Second Nature Climate Leadership Network.  However, these efforts are far from sufficient given the scale of the challenge.  It is clear that today’s and tomorrow’s businesses, government and professionals will need new knowledge and skills that only Higher Education can provide on a broad scale.  It is also clear that individuals and institutions must make large investments in economic and community activities that will create a low-carbon, inclusive and sustainable economy that serves all of humanity, now and in the future. 

 

Endowment Action to foster a Climate Friendly and Sustainable Society

Social purpose organizations – higher education, foundations, non-profits – play a critical role in this effort.  Higher education endowments are particularly important.  Endowments make it possible for higher education to continue providing the long-term funding for its critical mission in perpetuity.  The 2,000 U.S. higher education institutions with some form of endowment totaling $550 billion in assets can play an important role in creating a low-carbon, inclusive and sustainable economy and help fulfill their societal mission.  Higher education leadership will send a strong signal for such investment in other parts of society, including by educating and shifting the perspectives of tens of thousands of influential college and university trustees.

For these reasons, we launched the peer learning Intentional Endowments Network in 2014 to encourage and support endowments to enhance financial performance by aligning investments with institutional mission, values, and sustainability goals and help move society on a more just and sustainable path.  Given the diversity in the type and size of the higher education cohort, we decided that a structured peer-to-peer network is the most efficient, effective and elegant strategy to build the capacity for endowment leaders examine the best ways for mission-aligned investing that meet their needs at their own pace and in ways that fit their culture. 

Guided by a volunteer Steering Committee, IEN provides opportunities for learning and education, peer networking, convening, thought leadership and information exchange, around a variety of sustainable investing strategies, such as ESG integration, impact investing, and shareholder engagement.  Institutional members commit to participate in a peer learning community with experts and peers, sharing knowledge and resources, and exploring opportunities for collaboration.  The network does not endorse any particular investment or divestment strategy.  We help all members and participants figure out the best strategy for their institution.  We work with a variety of other groups in order to collaborate with, avoid unnecessary duplication, tap the wealth of the larger impact investing community and build the synergy that is critical to rapid movement and action. 

The great news is that the kind of investing we believe is critical for the well-being of society is growing rapidly in a variety of institutions, including higher education.  In its latest biennial report the non-profit, U.S. Sustainable, Responsible and Impact Investment Forum, found that institutional investors, money managers and community investing financial institutions consider environmental, social and governance issues in their investment research, analysis, and decision making across portfolios totaling $11.6 trillion. This is a 44 percent increase from the $8.1 trillion reported in 2016 and an 18-fold increase since 1995. and represents 24% of all institutionally invested funds in the U.S. (https://www.ussif.org/trends).

Many IEN member institutions have found that embracing this kind of investing, supported by their peers in the network have resulted in lower risk and strong financial returns as well as attracting new money and students for their institutions.  We have cataloged the latest in these trends and provide the tools and resources to help decisionmakers in this effort. Here is some information about current members and how to get involved (http://www.intentionalendowments.org/membership_and_benefits).

We look forward to seeing you at the 2019 Higher Education Climate Leadership Summit in February and to working together to address the climate and sustainability challenge in exciting and important ways that enhance the leadership of higher education.