Students Pursuing Active Stewardship of Their Portfolios Corroborate April IEN Study That Showed Student ESG Portfolios Thriving At Schools Across the Country

WASHINGTON, D.C. – May 13, 2021 -- Amid growing college and university endowment interest in shareholder engagement and environmental, social and governance (ESG)-focused investing, students from Arizona State University (ASU) were recognized today by a panel of judges as the best among college competitors in the student-focused SIILK Corporate Engagement Competition hosted by the Intentional Endowments Network (IEN).  

Teams from four universities -- Arizona State University, Dartmouth College Tuck School of Business, University of California Haas School of Business, and University of Chicago -- participated in the competition as a real-world introduction to sustainable investing. The Competition, sponsored by Federated Hermes, focused on the responsibility of investors to directly engage company management on the risks and opportunities they see to improve company financial performance, as well as social and environmental impact. 

The ASU Team proposed an investment in BlackRock, Inc., chosen for its financial reliability, strong ESG performance with material topics, competitiveness as an industry leader, commitment to racial justice, and opportunity to reduce its risks. According to the team, when discussing their proposed shareholder engagement strategy: “As the world’s largest asset manager, BlackRock is well-positioned to advance racial equity by investing in initiatives that strengthen minorities' ability to accumulate wealth. By improving diversity internally and in its invested companies, BlackRock can realize additional financial returns directly and indirectly through improvement in diversity and inclusion.” To multiply leverage to move BlackRock, the team proposed building a coalition of universities whose endowments either also employ BlackRock as an OCIO/fund manager or can invest in BlackRock as a shareholder. 

Nicole Torrico, Program Manager at the Intentional Endowments Network, said: “This competition is one of the ways IEN's SIILK Network is connecting students, faculty, and staff to transform sustainable investing education through student-managed investment funds. We're seeing active ownership become one of the fastest growing strategies to address material investment risks and position companies for an equitable, low-carbon economy. The students in this competition showed why and how to mobilize capital for positive impact by integrating active stewardship right into their investment decision making.” 

Each student team worked throughout the semester to produce both a written investment recommendation in a publicly-traded company listed on any major exchange, and a proposed shareholder engagement strategy that aligned with IEN’s Social Equity and Climate Goals.

A panel of judges selected the winning team based on presentation, provided evidence, scale of embedded ESG analysis, and the creativity and efficacy of the shareholder engagement strategy to both improve company financial performance and have a meaningful positive social or environmental impact.

A member of the judging panel, Emily DeMasi, Director, EOS at Federated Hermes, said: “This year’s IEN SIILK Student Competition showcased four talented and engaging student teams.  Each team came well prepared with rigorous financial analysis, thoughtful engagement approaches and genuine enthusiasm for the competition.  The inclusion of ESG issues and shareholder engagement in business school case studies is a testament to how much the industry has evolved and grown over the last decade.  The value of competitions like this one, particularly IEN’s, is in developing the next generation of ESG leaders.”  

A member of the judging panel, Laura Jernegan, Associate, EOS at Federated Hermes, said: “It was an honor to participate as one of the judges for this year’s IEN SIILK Student Competition. The rigor and passion of the student teams sparked memories of my own MBA experience, as case competitions provide a valuable platform to expand experience beyond the classroom and connect with like-minded professionals and fellow students and can be an integral part of shaping a passion into a career. It is inspiring to see the next generation of students focusing on shareholder engagement on material ESG issues and recognizing that more opportunities to create value present themselves when companies embrace and engage with their stakeholders.” 

This announcement builds off of a major new report from the Intentional Endowments Network  released last month that found that many higher-education institutions, including those that have been reluctant to divest or adopt sustainable investment strategies, already have student-managed investment funds (SMIFs) that are increasingly adopting sustainable investment approaches. 

As of 2020, IEN found 10% of SMIF assets under management (AUM), representing $68.4M in AUM, have a clear sustainable investing strategy, as colleges and universities recognized their responsibility in developing the next generation of investment leaders that emphasized long-term, strategic thinking to build a sustainable economy. SMIFs can be one way to build bridges between endowment investing and student leaders. 

The IEN report, “Educating the Next Generation of Sustainable Investment Leaders: A Report on the State of the Field of Student-Managed Investment Funds,” found: “Of the surveyed sustainably invested SMIFs, funding sources varied, with the majority of funds being carved out of the university endowment or funded by a separate pool of donations. Over half (55%) of surveyed funds invested in public equity, followed by a large number of respondents that indicated they invested in private equity (42.5%). Regarding sustainable investing integration, one quarter of funds focused on ESG integration, close to a quarter (23%) invested with an impact lens, 18% utilized negative and positive screens, and 5% engaged as shareholders.”

ABOUT IEN

The Intentional Endowments Network is a peer learning network of colleges, universities, and other mission-driven institutional investors working together to achieve their risk and return objectives through investment actions that create a thriving, sustainable economy. IEN has more than 165 network members including endowments, asset managers, investment consultants, nonprofit partners, and individuals. www.intentionalendowments.org 

IEN’s SIILK (Sustainable and Impact Investing Learning and Knowledge) Network has three main goals: (1) scale the uptake of sustainable investing education, including courses and experiential education opportunities like SMIFs, (2) support SMIFs as they work to build stronger bridges between their SMIF and their institution’s broader endowment, and (3) increase the diversity and number of students that enter the sustainable investing field. www.SIILKnetwork.org  

ABOUT FEDERATED HERMES                          

Federated Hermes, Inc. is a leading global investment manager with $625.0 billion in assets under management as of March 31, 2021. Guided by our conviction that responsible investing is the best way to create wealth over the long term, our investment solutions span equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies. Providing world-class active investment management and engagement services to more than 11,000 institutions and intermediaries, our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Headquartered in Pittsburgh, Federated Hermes’ nearly 2,000 employees include those in London, New York, Boston and offices worldwide. For more information, visit FederatedHermes.com.

CONTACT:   Alex Frank, (703) 276-3264 and [email protected].

10% of Student-Managed Investment Funds Now Have a Clear Sustainable Investing Strategy, Reaching $68.4M in Assets Under Management in 2020.

ANDOVER, MA. – April 6, 2021 – Interest over the past decade in the university and endowment investing space has focused primarily on endowment divestment from fossil fuels, including many high-profile portfolio decarbonization pushes at institutions such as Harvard, Yale, and Princeton. Students and alumni alike have been pushing these institutions to divest their large endowments of fossil fuels and adopt sustainable investing practices. A major new report from the Intentional Endowments Network (IEN) finds that many of the higher-education institutions that have been reluctant to divest or adopt sustainable investment strategies, already have student-managed investment funds that are increasingly adopting sustainable investment approaches. 

As of 2020, IEN found 10 percent of student-managed investment funds (SMIFs) have a clear sustainable investing strategy, as colleges and universities recognized their responsibility in developing the next generation of investment leaders that emphasized long-term, strategic thinking to build a sustainable economy. 

The IEN report, “Educating the Next Generation of Sustainable Investment Leaders: A Report on the State of the Field of Student-Managed Investment Funds,” found: “Of the surveyed SI SMIFs, funding sources varied, with the majority of funds being carved out of the university endowment or funded by a separate pool of donations. Over half (55%) of surveyed funds invested in public equity, followed by a large number of respondents that indicated they invested in private equity (42.5%). Regarding sustainable investing integration, one quarter of funds focused on ESG integration, close to a quarter (23%) invested with an impact lens, 18% utilized negative and positive screens, and 5% engaged as shareholders.”

Report co-author Nicole Torrico, program manager, IEN, said: “Colleges and Universities should strongly consider developing sustainable investing focused student-managed investment funds as a way to provide students with experiential learning opportunities and actively develop the next generation of sustainable investment leaders. As institutions designed to anticipate tomorrow’s challenges and prepare students to enter the workforce, colleges and universities have a responsibility to respond to the emerging trends of sustainable investing.”

The following are four SI SMIF case studies cited in the report:

• Yale University Dwight Hall Socially Responsible Investment Fund (DHSRI): Undergraduate-run socially responsible investment fund. Yale’s Dwight Hall Center for Public Service and Social Justice initially seeded the fund with $50,000 of its $10 million endowment in 2008. DHSRI has over $200,000 AUM and pursues positive social and environmental impact while maximizing financial return. In 2016, DHSRI became the first student group to pursue shareholder engagement as a sustainable investing strategy.
• Northeastern University Impact Fund (NUImpact Fund): Undergraduate-run investment club with over 40 members focusing on Impact and Community Investing. The fund manages over $50,000 in AUM via Private Equity. 
• Bryant University Archway Investment Equity Fund: Undergraduate-run fund established in 2005 to provide Bryant University students with the opportunity to manage an investment portfolio of actual money following the principles used by financial professionals. The initial investment in the Fund was $200,000. Over the years, Bryant University has provided four additional cash infusions totaling $250,000. The fund’s portfolio was valued at about $1,700,000 in December 2020.
• Portland State University Impact Investing Fund: The graduate-run PSU Impact Investing Fund focuses on investing in private, early-stage companies in the Pacific Northwest and especially those in Portland. The fund has a particular interest in pursuing investments in early-stage start-ups with high potential to make significant positive environmental or social impact alongside financial returns.

As the IEN report concludes: “Sustainable investing student-managed investment funds provide an invaluable learning experience for students and prepares them to enter into the sustainable investing field, while also promoting long-term systemic thinking to build a more sustainable economy.”

The 40 SI SMIFs surveyed in the IEN report are: Appalachian State University; Arizona State University, ASU ESG SIM Fund; Bard College, Student Managed Fund; Brigham Young University, University Impact; Brown University, Socially Responsible Investment Fund; Bryant University, Archway Investment Fund; California State University, Northridge, FIN491BH A & B; Claremont McKenna College, Student Investment Fund; Columbia Business School, Microlumbia Fund; Duke University, Duke University Investment Club; Emory University, Emory Impact Investing Group; Emory University, Goizueta Business School, Goizueta Impact Investors; Haverford College, Microfinance and Impact Investing Initiative (Mi3); Indiana University, Hoosier Social Impact Fund; Loyola Marymount University, Student Investment Fund; Massachusetts Institute of Technology, Sloan Investment Management Club (IMC); Middlebury College, RISE (Research & Investment in Sustainable Equity); New York University, NYU Impact Investment Fund; Northeastern University, NU Impact Investing Initiative; Ouachita Baptist University, Eddie and Phyllis Ary Student Investment Fund; Portland State University, Student Investment Fund; Santa Clara University, Impact Capital; Simon Fraser University (Graduate), SIAS Fund; Simon Fraser University (Undergraduate), Beedie Endowment Asset Management (BEAM) fund; Stanford University, Graduate School of Business, GSB Impact Fund; Tuck School of Business at Dartmouth, ESG Fund; Tuck School of Business at Dartmouth, Tuck Social Venture Fund; University of California, Berkeley, Haas Socially Responsible Investment Fund; University of Dayton, Hanley Sustainability Fund; University of Michigan, Ross School of Business; University of Minnesota, Carlson Funds Enterprise; University of North Carolina, Asheville, Student Environmental Center – ESG Fund; University of Oregon, University of Oregon Investment Group; University of Pennsylvania, Wharton Business School, Wharton Impact Investing Partners; University of Utah, Sorenson Impact Center; University of Virginia, Darden Business School, Darden Impact Ventures; Villanova University (Graduate), Student Managed Fund; Villanova University (Undergraduate), Student Managed Fund; Washington College, Brown Advisory Student-Managed Investment Fund; Yale University, Dwight Hall Socially Responsible Investment Fund.

ABOUT IEN

The Intentional Endowments Network is a peer learning network of colleges, universities, and other mission-driven institutional investors working together to achieve their risk and return objectives through investment actions that create a thriving, sustainable economy. IEN has more than 165 network members including endowments, asset managers, investment consultants, nonprofit partners and individuals. www.intentionalendowments.org 

IEN’s SIILK (Sustainable and Impact Investing Learning and Knowledge) Network has three main goals: (1) scale the uptake of sustainable investing education, including courses and experiential education opportunities like SMIFs, (2) support SMIFs as they work to build stronger bridges between their SMIF and their institution’s broader endowment, and (3) increase the diversity and number of students that enter the sustainable investing field. www.SIILKnetwork.org

CONTACT:   Alex Frank, (703) 276-3264 and [email protected].

Recording:

Workshop Facilitators: 

Henry M. Lancaster, Director,HBCU Green Fund, and Trustee,Lincoln University

Erik Gross, Board Treasurer, UNH Foundation

Download the full report 

About the Report

This report compiles information on the 40 sustainably invested student-managed investment funds (SMIFs) engaged in The SIILK Network (IEN's student and faculty facing work), and highlights the assets under management, fund structure, and sustainable investing strategies used by student-managed investment funds. As of 2020, IEN found 10% of SMIF assets under management (AUM), representing $68.4M in AUM, have a clear sustainable investing strategy, as colleges and universities recognized their responsibility in developing the next generation of investment leaders that emphasized long-term, strategic thinking to build a sustainable economy. 

SMIFs provide an experiential education opportunity for students interested in finance by allowing students to actively participate in financial markets by managing a real investment portfolio. These SMIFs support students in gaining real-world experience and developing their professional networks, frequently resulting in high job placement rates.

Report findings include:

• Of the surveyed sustainably invested SMIFs, funding sources varied, with the majority of funds being carved out of the university endowment or funded by a separate pool of donations.
• Over half (55%) of surveyed funds invested in public equity, followed by a large number of respondents that indicated they invested in private equity (42.5%).
• Regarding sustainable investing integration, one quarter of funds focused on ESG integration, close to a quarter (23%) invested with an impact lens, 18% utilized negative and positive screens, and 5% engaged as shareholders.

About SIILK & Getting Involved

The SIILK (Sustainable and Impact Investing Learning and Knowledge) Network is an initiative of IEN. SIILK has three main goals: (1) scale the uptake of sustainable investing education, including courses and experiential education opportunities like SMIFs, (2) support SMIFs as they work to build stronger bridges between their SMIF and their institution’s broader endowment, and (3) increase the diversity and number of students that enter the sustainable investing field.

Through SIILK, IEN is working to ensure higher education institutions develop the next generation of leaders committed to an equitable, low carbon, and regenerative economy through student-managed investment funds and sustainable investing curriculum. Contact Nicole Torrico at [email protected] for more information or to get involved. To be included in future iterations of this report, complete this survey: https://tinyurl.com/SIILKsurvey

Acknowledgments

Development of this report would not have been possible without the contributions and survey responses from members of the SIILK Network, or the generous support and sponsorship from our partners.

Contributing Authors:

• Julia Maloney, Sustainable Investing Graduate Fellow, Intentional Endowments Network
• Nicole Torrico, Program Manager, Intentional Endowments Network

Randall Strickland, Director, Client Portfolio Manager, Westfuller

Tim Coffin, Senior Vice President, Breckinridge Capital Advisors

Dianne Dillon-Ridgley, Crane Board Chair, Environmentalist and Human Rights Activist; Board Chair, Green Leadership Trust (GLT); Board Chair, Center for International Environmental Law (CIEL)

Randall Strickland, Director and Investment Advisor, Cornerstone Capital Group

Randall is a Director for Cornerstone Capital Group, a financial services firm offering investment advisory, thematic research, and strategic consulting services to endowments and family offices in the field of Sustainable/Impact Investment. He is responsible for supporting the firm's investment advisory clients in the areas of investment policy planning, environmental, social and governance (ESG) and impact investment integration, investment manager and strategy selection, and impact measurement. He brings over 25 years of experience in the asset management arena.  Randall also serves as an Adjunct Professor in the Sustainable MBA program at Bard College and the Gabelli School of Business at Fordham University, teaching Sustainable Finance and Impact Investing.

Prior to joining Cornerstone, Randall served as a Sustainable Investment Specialist at Sentinel Investments, where he was a member of the firm’s sustainable investment team. Randall’s experience also includes senior positions at City National Bank of New Jersey, ImpactAssets, Principal Global Investors, Commonfund and TIAA.  He serves on the board of Net Impact, the HBCU Green Fund, and the Global Leadership and Achievement Foundation of Kappa Alpha Psi, Jersey City (NJ) Alumni Chapter.  He earned a Bachelor of Science from Cornell University and a Master of Arts from New York University.

Ken Redd, Senior Director, Research and Policy Analysis, National Association of College and University Business Officers (NACUBO)

Kenneth E. Redd is Senior Director, Research and Policy Analysis for the National Association of College and University Business Officers (NACUBO). At NACUBO, Ken manages the annual NACUBO-TIAA Study of Endowments, the NACUBO Tuition Discounting Study, and other research reports on higher education finance, enrollment, and student financial aid issues. He came to NACUBO in 2008 from the Council of Graduate Schools, where he was director of research and policy analysis.

In addition to his work at NACUBO, Ken also serves on the board of trustees for the Meadville Lombard Theological School in Chicago, IL, and the board of advisors for the Frank J. Batten School of Leadership and Public Policy, University of Virginia. Ken is also a member of the investment committee of the Unitarian Universalist Common Endowment Fund (UUCEF), and is a member of the board of directors for the National Association for College Admission Counseling (NACAC).

Ken has a master’s degree in public affairs from the Hubert H. Humphrey School of Public Affairs, University of Minnesota, and a bachelor’s degree in English and political science from Tufts University, Medford, MA.

Liz Clark, Vice President for Policy and Research, National Association of College and University Business Officers (NACUBO)

Liz LaPolt Clark is Vice President for Policy and Research at the National Association of College and University Business Officers (NACUBO), a membership organization representing more than 1,900 colleges and universities across the country. Liz leads the team responsible for analysis of federal regulatory and legislative actions, research, and communications at NACUBO. She has been widely quoted in the press and is a sought-after speaker on how Washington politics and federal policies impact higher education. Liz got her start on Capitol Hill in 1999, running Cornell University's first Washington, DC-based federal relations office, and in her career has led federal affairs for the State University of New York (SUNY) System and for Oregon State University.

A native of Liberty, NY, Liz is a graduate of Binghamton University (SUNY) and received a Master’s degree from Cornell University.

Over the past academic year, student teams from across the U.S. participated in a first-of-its-kind student investment competition hosted by the Intentional Endowments Network (IEN). A panel of judges selected the team from the University of California, Berkeley as the inaugural winners of the SIILK Corporate Engagement Competition, for preparing the strongest investment recommendation and shareholder engagement strategy to improve company performance (and investment returns) through better environmental, social, and governance (ESG) practices.

“The competition gave us an opportunity to think about strategies for engaging with management and practice crafting a shareholder resolution,” said Katharine Hawthorne, a member of the winning team. “Highlights of the competition included learning how the other teams integrated financial and ESG considerations and seeing the different approaches to shareholder engagement for driving corporate sustainability.”

The pilot year of this competition put a new spin on the traditional approach to investment competitions by focusing on the responsibility of investors to directly engage company management on the risks and opportunities they see. IEN invited students to not only produce an investment recommendation in a publicly traded company, but also to include in their recommendation a shareholder engagement strategy for improving the company’s business performance and impact on society. Teams from four universities - Arizona State University, Bryant University, Yale University, and the winning team from the University of California, Berkeley - participated in the competition as a real-world introduction to sustainable investing.

“We launched this competition to bring more awareness to the immense opportunity to create impact through shareholder engagement in public equity investments. The scale and influence of such a mainstream asset class makes it tremendously important for students interested in entering the investment field to be able to spot opportunities to actively engage as shareholders,” said Nicole Torrico, a Program Manager at the Intentional Endowments Network.  “By growing this skill set, students now and in their future careers will be able to achieve positive impact at scale while improving the financial performance of their investments.” 

Each student team worked throughout the year to write an investment recommendation that included an investment thesis, financial model and valuation, quantitative ESG research and analysis, market and sector analysis with comparison to industry peers, risk identification, and a proposed shareholder engagement strategy to address an identified risk area.

While each team’s written recommendation was impressive, the judges noted that identifying a company with financial growth potential that is well positioned for ESG opportunity, not just risk management --  and focusing on SASB as a framework for ESG analysis -- made the University of California, Berkeley’s investment recommendation stand out as exceptional. Additionally, focusing on a company that is smaller in size and at the beginning of its ESG journey provides an opportunity for more significant and impactful shareholder influence. IEN released a video announcing the winning team here.

“I was very glad to participate in the inaugural competition, and was blown away by the shareholder engagement recommendations in particular,” said Gabe Rissman, co-founder and president of YourStake.org, and one of the competition judges. “ The student teams presented engagement theses that will create positive societal impact and enhance shareholder value. Corporate management should listen closely.”

Shareholder engagement has become a greater area of focus for IEN. In addition to hosting this competition, over the past year, IEN re-launched a shareholder engagement working group and collaborated with Warren Wilson College on an engagement strategy that resulted in the co-filing of 3 shareholder resolutions by the college. “Increasingly, college and universities are interested in dialogue, engagement, and proxy voting as a means of effecting more forward thinking company strategy around the climate and inequality challenges we face,” said Alice DonnaSelva, Managing Director of the Intentional Endowments Network.

This competition is part of the ongoing programming efforts of IEN’s SIILK Network, a peer learning network of students, faculty, and staff involved with student-managed investment funds and finance curriculum focused on sustainable, ESG, and impact investing. SIILK members connect to scale the uptake of sustainable investing education at colleges and universities across the country, build strong bridges between endowment investing and student-managed funds, and grow the talent pipeline, with an emphasis on bringing more women and people of color into the industry. 

For more information, visit SIILKnetwork.org or contact Nicole Torrico at [email protected].

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TIFF's 2021 Sustainability Report - TIFF

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