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.”
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].