BOSTON, MA (October 15, 2020) – A liberal arts college has demonstrated that endowments of all sizes can successfully implement an important but underutilized strategy to align their investments with institutional mission, according to a new report from the Intentional Endowments Network (IEN). Launched today, the case study Warren Wilson College: Active Ownership in the Endowment details the school’s investment policies, including how the endowment began using shareholder engagement strategies - exercising its ownership stake to ensure that companies are adequately addressing environmental, social, and governance (ESG) risks and opportunities.
As more higher education institutions set ambitious ESG, climate, and racial equity goals for the communities and economy their students enter, few have implemented a shareholder engagement strategy to push the companies they already own to improve their ESG performance. The experience of Warren Wilson’s $55 million endowment - a relatively small slice of the over $600 billion in total U.S. higher education endowment assets - shows that the practical barriers to being an active owner can all be overcome.
“The challenges, especially for smaller endowments across IEN’s network, are real - limited staff time, access to good data, heavy reliance on commingled funds, and more,” said IEN Managing Director Alice DonnaSelva. “But as this case study from Warren Wilson College shows, it is absolutely possible to activate a portfolio and use shareholder engagement tools like proxy voting to better align the incentives of company management with the long-term interests of institutional investors and their beneficiaries.”
The case study provides a behind-the-scenes look at the endowment’s path to active ownership, as well as how shareholder engagement is complementing Warren Wilson College’s other responsible investment strategies, like ensuring racial and gender diversity among the endowment’s asset managers, and divesting from fossil fuels. The active ownership process generated key lessons including: establish a multi-stakeholder advisory committee; leverage collaborative shareholder initiatives; strategically make use of separately managed accounts and commingled funds; co-file resolutions with more experienced shareholders; request appropriate proxy voting services.
Warren Wilson College President Lynn Morton reflected on the experience: “Warren Wilson College strives to be a leader in our community and amongst our peers in higher education on issues of sustainability, the environment, and economic and social justice. Our mission statement clearly reflects our values: Warren Wilson College’s distinctive approach to education intentionally integrates academics, work, and community engagement to cultivate curiosity, empathy, and integrity. We empower graduates to pursue meaningful careers and lead purposeful lives dedicated to a just, equitable, and sustainable world. It was actually our students who, some years ago, began a campus conversation about our endowment fund management, and to this day our ESG committee includes alumni and current students as well as faculty, staff, trustees, and subject matter experts. We created a Responsible Investment Policy to help guide us on our journey to create an ethical and responsible portfolio that was carbon free, incorporated ESG criteria across asset classes, and specifically sought out investment managers of color and women-owned investment firms. More recently, we took our proactive endowment fund management approach to the other side of the portfolio and became an active shareholder that utilizes engagement strategies – proxy voting and shareholder resolutions – to engage with companies we have a stake in and to seek better alignment between management and shareholder. As a small college, we have a large positive impact on the world. That’s what we’re all about.”
The range of strategies that endowment fiduciaries are adopting to be good stewards of the resources entrusted to them continue to grow. IEN regularly updates snapshots of over 60 higher education endowments’ sustainable, responsible, and mission-aligned investment strategies, and works with leaders like Warren Wilson College to document and share the process of developing and implementing new strategies.
About Warren Wilson College
Warren Wilson College is a vibrant, independent college with an innovative curriculum that purposefully integrates the liberal arts with community engagement and work experiences to prepare students for not only professional success, but also a life of meaning. Visit www.warren-wilson.edu.
About the Intentional Endowments Network
The Intentional Endowments Network is a non-profit, peer-learning network advancing intentionally designed endowments – those that seek to enhance financial performance by making investments that advance a low carbon, equitable and regenerative economy. Working closely with leading organizations, the network engages leaders and key stakeholders from higher education, foundations, business, and nonprofits. It provides opportunities for learning and education, peer networking, convening, thought leadership and information exchange around a variety of strategies (e.g., ESG integration, impact investing, and shareholder engagement). www.intentionalendowments.org
Alice DonnaSelva, Managing Director, Intentional Endowments Network, [email protected]