Welcome to the fourth edition of your bi-monthly newsletter! This month Sonal Mahida, US Network Manager for Principles for Responsible Investment (PRI), discusses PRI's landmark new report on Fiduciary Duty within the context of ESG investing.
We also highlight some actions of the San Francisco State University Foundation related to sustainable investing.
Your contributions to this conversation are welcome and needed. Please be in touch with any questions, news, or ideas for the IEN.
Tony Cortese & Georges Dyer
Updates from the Network
Intentionally Designed Endowment Forum at Portland State University
The Intentional Endowments Network along with Portland State University have partnered to host the Intentionally Designed Endowment Forum at Portland State University. This event will explore how endowments can be positioned to create a more just, healthy and sustainable society. For a complete list of participating institutions, the program agenda, guest speakers, sponsors, and info on hotel accommodation, please visit the events page on our website. Remember, there is still time to register. Click HERE to join the conversation in Portland.
Steering Committee Update
Since its first meeting in June, the Steering Committee has made great progress. In addition to providing strategic guidance on the direction of the IEN, they have formed 6 working groups on: Fiduciary Duty, the Business Case for ESG, Peer to Peer Networking, Shareholder Engagement, Sign On Initiatives and IEN funding Strategy. We will have our next committee meeting on November 9, before the Portland State Forum. Finally, the IEN steering committee is pleased to announce two new members: Erica Pagel a Portfolio Manager at Brown Advisory and Joseph Biernat, Trustee at Gettysburg College.
Tony Cortese's Discussion with University of Dayton
At the request of Dan Curran, President of University of Dayton and George Hanley, Chair of the Investment Committee of its Board of Trustees, Tony Cortese discussed the role of higher education in sustainable investing and the current trends in the space at a meeting of the Investment Committee and the full Board of Trustees on October 14-15 at the school. The University of Dayton began full divestment of fossil fuels from its $700+ million endowment in 2014. While one year is too short a horizon to discuss trends, use of ESG criteria in investing resulted in about double the expected rate of return if they had just done conventional investing over the last 12 months.
Global Investor Statement on Climate Change
As we approach the critical international climate negotiations (COP-21) in Paris this December, the IEN has been working to enlist a substantial number of endowments to sign a Global Investor Statement on Climate Change. In doing so these endowments add the powerful voice of higher education to the call for a strong international climate agreement. More than 370 global institutional investors, representing over $24 trillion in assets, including CalPERS Blackrock, and the University of California, have already signed the Statement. Please consider adding your endowment's name to this important statement and sharing with your colleagues. To sign, click here and provide your institution's name, assets under management and the appropriate contact person's name and email.
IEN Hosts Panel on "The Intentionally Designed Endowment" at SOCAP15
On October 9th, IEN hosted a panel on "The Intentionally Designed Endowment" at SOCAP15 in San Francisco. SOCAP (short for "social capital markets") is a world-renowned conference series dedicated to "increasing the flow of capital toward social good." This year's event had 2,800 participants, and this session was the only one to bring endowments into the conversation. The session, moderated by Georges Dyer, had a fantastic line-up of panelists:
- Robert Nava, Vice President of University Advancement, San Francisco State University
- Sonal Mahida, US Network Manager, Principles for Responsible Investment
- Ophir Bruck, Sustainable Investment Analyst, University of California
Our conversation explored the variety of approaches endowments are employing in sustainable investment such as investing in climate solutions, comprehensive ESG integration, and measuring the carbon footprint of a portfolio. The feedback from participants was highly positive -- and several noted the importance of having endowments engaging more actively on these topics.
Portland State Forum, November 9-10, 2015 l Portland, OR.
The SRI Conference, November 3-5, 2015 | Colorado Springs, CO
Sustainatopia, November 15-18, 2015 l Boston, MA
School Spotlight: San Francisco State University Foundation
San Francisco State University Foundation was the first public university to divest from fossil fuels. In addition to divesting from direct investments in coal and tar sands, they have decided to create a carbon footprint for its portfolio. Most large US companies publish their carbon footprint under widely accepted standards, Using the percentage of the total stock outstanding in their investment portfolio, SFSU can prorate their portfolios carbon footprint. In cases where companies did not report, they used industry averages. The results indicate some non-fossil fuel related industries have large carbon footprints. SFSU's goal is to reduce this carbon footprint over time. Robert Nava, President of the San Francisco University State Foundation, is a member of the IEN Steering Committee.
Fiduciary Duty is Not an Obstacle to Addressing ESG
By Sonal Mahida
Outdated interpretations and limited understandings of materiality have led to the misconception that addressing environmental, social and governance (ESG) factors falls outside the scope of fiduciary duty. As a result, incompatibility with fiduciary duty has often been given as a reason by asset managers and advisers for not incorporating ESG factors into the investment decision-making process. A recent Principles for Responsible Investing report “Fiduciary Duty in the 21st Century,” published along with UNEPFI, UNEP Inquiry and the UN Global Compact, looked at fiduciary duty across eight markets--US, Canada, UK, Germany, Brazil, Australia, Japan and South Africa--and found that for asset owners, fiduciary duty is not an obstacle to action.
Fiduciary duties exist to ensure that those who manage money on behalf of others act in the interests of beneficiaries, rather than serving their own interests. Under the duty of loyalty, fiduciaries should act in good faith, should impartially balance the conflicting interests of different beneficiaries, should avoid conflicts of interest and should not act for the benefit of themselves or a third party. The duty of prudence calls on fiduciaries to act with due care, skill and diligence, investing as an ‘ordinary prudent person’ would do. Continue Reading.
Action on Climate: A Practical Guide for Fiduciaries l Croatan Institute, September 2015
- The Role of the Corporation in Society: Implication for Investors l The Calvert-Serafeim, September 2015
Report: Investors Should Manage Climate Risks As "Forceful Stewards l Sustainable Brands, September 2015
- Essentials of Impact Investing: A Guide for Small-staffed Foundations l Mission Investors Exchange, September 2015
In the news…
A few select news articles we've posted over the past two months…
US Department of Labor declares Bush Interpretive Bulletin on Pension Investments Null and Void l Weinberg, Roger & Rosenfeld
- MIT won't divest from fossil-fuel firms l Boston Global, October 21, 2015
Blackrock debuts major impact investment fund l BusinessGreen, By James Murray, October 14, 2015
Warren Wilson College trustee vote to divest from fossil fuels l By Able Allen, October 12, 2015
IRS Blesses Private Foundation Mission-Related Investing: Implications for the Charitable Sector l Davis Wright Tremaine LLP, September 29, 2015
- Fossil fuel divestments hit $2.6 trillion l Upstream, September 22, 2015
Sustainable investing and fiduciary responsibility: conflict and confluence l Enterprising Investor, By Usman Hayat, September 21, 2015
UC Investing plan seeks solution to climate change l San Francisco Chronicle, By Jagdeep Singh Bachher, September 10, 2015
Sustainable Investing: A Defense l The Wall Street Journal, By Geeta Aiyer, September 8, 2015
If you have an original piece you would like to submit for an upcoming newsletter, please email Peyton Siler Jones at [email protected]!
For more information about the Intentional Endowments Network and how you can support this work, please contact Georges Dyer at [email protected]