Intentionally Designed Endowments Forum

Intentionally Designed Endowments Forum

SAN FRANCISCO, CA – Endowments that are seeking to invest responsibly often confront significant challenges as they strive to meet both fiduciary obligations and stakeholder expectations for impact and social responsibility.

On this point, the San Francisco State University Foundation and the Intentional Endowments Network brought together presidents, trustees, and key stakeholders representing university endowments throughout California. The August 2016 conference provided a forum to discuss strategies and paths for the achievement of multiple investment goals.

Beacon Point investment consultants attended the sessions and provide the following report.

The two-day gathering enabled discussions among a group of foundation officials with a broad range of experiences and expectations for environmental, social and governance (ESG) investing. Some attendees represented organizations that are just beginning to consider or discuss sustainability. Others represented foundations with established policies and track records. All participated under the Chatham House Rule, which empowers those attending to make use of the information obtained but not to attribute any statements or concepts to specific attendees.

For those officials of foundations at the earliest stages of adoption and discovery of a sustainable investment policy, the program included multiple workshops and panel discussions. At these sessions, attendees considered case studies and comparisons of different approaches and policy formats. Audience members reviewed and discussed divestment programs as well as impact investment plans.

One case study showed how a university’s experience with student demands for divestiture from fossil fuels resulted in a thoughtful, structured and manageable approach to social responsibility. In this case, the school brought together students, board members, and the investment committee for fully engaged discussions. From this, an ESG subcommittee of the investment committee was formed and both a divestment plan and a standalone green fund was established. The subcommittee attends board meetings and reports on the divestment plan. As a result, the subcommittee acts as both a buffer and a line of communication between the board and students. The investment managers vote proxies and the university has not taken an activist stand. The university’s speakers noted that while this process has taken time and is still in development, it has led to substantive conversations and stronger relationships with donors.

Another university system shared that while it has divested from coal and private prisons, its investment committee has applied its sustainability focus more toward investments in real assets.  This foundation has committed to sustainable investment practices and to developing a more formal sustainable investment policy. Within that, it has pledged to become carbon neutral by 2025.

Different universities choose to address mission-related investment in various ways. One private university reported that it chose not to change the public equity and fixed income investments in its portfolio but rather to increase its direct investment in solar and alternative energies.

Among the key takeaway ideas from the conference:

  1. Engage students – Help educate students regarding the intent, use and source of endowment funds through open forums and discussion panels
  2. Focus on mission – The core objectives of the organization should drive board and investment committee decisions
  3. Be patient – The process of establishing and implementing ESG policy takes time (At the forum, several universities shared their process, noting that they began over three years ago and are still finalizing their investment policy statements and investment portfolio)
  4. Customize – There are many ways to incorporate mission-related investments including sustainable investing, ESG investing, impact investing, shareholder engagement, divestment, etc.