This week, we are kicking off a series of blog posts in which IEN members will share their thinking about intentional endowment investing in the face of this global pandemic. Follow along to get insight from Hannah Bowen of the Intentional Endowments Network into the new challenges and opportunities we as a network are facing.
What does the current crisis mean for the field we have been building? What does it mean for the Higher Education sector? How will it change the investment industry? How will it change our economy, the balance between companies’ stakeholders, and the business models that can succeed after this disruption? How will the current crisis affect our work on climate and social justice? How will this crisis change the way peer networks operate?
All of us are full of questions these days. And while we won’t have definitive answers right away, it’s important to start shaping our answers together. In this first post, we are summarizing a few themes we have heard about over the last few weeks through IEN’s Community Conversation online meetings, calls with IEN Working Groups, Steering Committee, and Executive Committee, and check-ins with members across the network. As the series continues, we look forward to hearing more about how your work is evolving.
The bottom line so far:
Across the network, many of us are grateful to be able to work from home, and are learning how to do so in a way that balances the needs of our personal lives and professional responsibilities. But while most of our organizations have been able to shift our roles online for the most part, we are all part of families, organizations, and/or communities with people who have not. We are surrounded by friends, colleagues, family, and neighbors who are still working essential jobs at risk to their health, or who have lost work as a result of this crisis. That impacts us and our work indirectly even where it does not impact our jobs directly.
For higher education, this crisis is beyond what even the best-prepared campus had a contingency plan for. Our higher ed institutions have had to close campus operations, take care of students, staff, and the campus community, move teaching/learning and other activities online to the extent possible, and to do so immediately and with no clear “return to normal” date. Their endowments, which could provide a bulwark against both the unexpected costs of the emergency response and the loss in revenue, are losing value. A full reimagining of operating models may be needed - small campuses may look at joining larger institutions or closing; the balance between in-person and online activities may shift dramatically; the role of public funding will be debated; the types of infrastructure and staffing that will be prioritized may change; the factors that students will consider in choosing where to apply and attend - all of this will be up for discussion. But for now, higher ed leaders have a responsibility to existing students and staff, and to the communities in which they sit, and will need time to manage the immediate emergency support needed even as they prepare to face decisions about what longer-term transformation would look like.
- For investment firms, the economic dimensions of this health crisis have meant a frenzy of activity. From a business standpoint, many firms are seeing their focus on environmental and social sustainability, as well as good corporate governance, pay off. The crisis has, thus far, provided a strong proof point for the value of sustainable investing. At the same time, firms like businesses across sectors are facing new challenges in their own operations - facing new questions about work-life balance and their own commitment to workers’ well-being. There are also difficult conversations to be had with clients, including navigating the reality that while institutional clients may be more open to sustainable investing strategies as a result of this crisis, they may not be in a position to have those conversations (or shift to those strategies) during this crisis. There are huge opportunities coming out of this crisis to reshape the investment world toward sustainable investing and stakeholder capitalism, and members of our network are not shying away from thinking big about how to re-envision finance and corporate governance.
In late February, just before it became clear that the novel coronavirus had started to spread widely in the U.S., we were lucky to be able to come together in Atlanta for our largest annual event. We were energized by what felt like a phase shift in the momentum for sustainable investing. Many of the endowment representatives, college/university sustainability directors, and investment professionals who came together at the 2020 Higher Ed Climate Leadership Summit had previously been looking at an uphill battle to convince investment committees “why we should be using ESG and other strategies to prioritize equity, climate, and other social and economic sustainability impacts in our portfolio.”
This year, many said they were seeing something different now - that it feels like we’re at a turning point, and are now facing a clear runway to scale up sustainable investing. We released a report that showed a clear track record of financial performance for a variety of sustainable investing strategies. We heard from inspiring speakers who described how addressing inequality and structural injustice is the only way to solve the climate crisis. Now, as we discussed in the Endowment Investing Forum at the Summit, it feels like the relevant question to put to investment committees, investment consultants, and managers is “Why aren’t we using the strategies that will make our institution financially stable in the long term and build an equitable, sustainable economy?” Those include ESG strategies as well as more specific analysis of and accounting for the racial equity, gender equity, workers’ rights, climate, and other social and environmental impacts of our investments. That question and that accounting for our full impact seem even more salient now.
Over the next few weeks, we will be sharing insights from IEN members on this blog. This will be a venue for us as a network to think about what has already changed, and what we want to change - even to transform - going forward.
Click on this link to read more in the Coronavirus Crisis Views Blog Series.