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.