University endowments disappoint on ESG
As American universities tighten up in the admissions department, they are slacking on their environmental, social and governance (ESG) investment responsibilities, a new report finds.
"Today's endowments no longer are leaders in the institutional
ESG investment arena," says Jon Lukomnik, IRRC Institute executive
University endowments have historically been a leader in the
realm of ESG investments. But, a new report funded by the Investor
Responsibility Research Center Institute (IRRCI) and conducted by
Tellus Institute, has found that they are less pervasive than
expected. This comes at a time when ESG is increasingly being
incorporated into mainstream investment decisions.
"The findings are somewhat counter-intuitive to what one would
expect from the university community," said Jon Lukomnik, IRRC
Institute executive director. "Historically, endowments were
groundbreaking institutional investors that addressed social and
environmental considerations in their investments far earlier than
others. Our findings indicate that today's endowments no longer are
leaders in the institutional ESG investment arena."
The report also revealed a lack of transparency in terms of
university reporting of their ESG investments. Some universities
claimed to be making sustainable investments that when further
inspected did not actually meet the standard criteria for ESG.
When ESG criteria were met, it was usually a response to the
demands of students, alumni, donors, faculty and staff, and
non-profit and community organisations. Where it occurred, ESG
investment activity usually took the form of single-issue negative
screening of public-equity portfolios.
The overall message of the report is that the modern US
university endowments community exhibits a weak understanding of
ESG strategies, trends, opportunities, and language. It does,
however, find evidence of small-scale experimentation in areas such
as microfinance investment, student-run SRI funds, green revolving
loan funds and shareholder advocacy.