ESG Investing Lacking in University Endowments
By Kymberly Levesque
While college and university endowments may have a reputation of forward-looking ESG investments, a new report finds that modern endowment investing falls short of that reputation.
The report, titled “Environmental, Social and Governance Investing by College and University Endowments in the United States: Social Responsibility, Sustainability, and Stakeholder Relations,” was funded by the Investor Responsibility Research Center Institute and conducted by Tellus Institute.
College and university endowments in the United States currently have more than $400 billion in combined assets under management. The IRRC/Tellus report found that investment strategies that integrate environment, social and governance (ESG) factors are not as common as many believe.
The executive director of the IRRC Institute, Jon Lukomnik, described the report’s finding as counter-intuitive, given endowments’ reputations as groundbreaking institutional investors dating back to the anti-apartheid era. The study also found a lack of transparency toward endowments' ESG practices. Further, several colleges and universities claimed to be making sustainable investments but their investments fail to meet the standard ESG definitions.
Some funds, however, could be used as examples for sustainable investing within the endowment community: Middlebury and Dickinson Colleges and Tufts University all maintain funds with a sustainability focus. The report notes that such funds can often arise after the urging of a disparate group of stakeholders at universities and colleges, such as students, alumni, donors and faculty.
While the report suggests that endowments have lost their pioneering ways, what remains is an opportunity for stakeholders to encourage increased ESG investing within college and university endowments.
Posted: July 31, 2012