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Colleges endowments as ESG institutional investors
In the Sustainable Finance Universe, an important gathering of institutional investors has been strengthening well before the institutional setting shift towards ESG. Higher education institutions paved the way for institutional programmatic reforms (i.e. the European Green Deal) since their trust on Sustainable Finance pressurised the reformist season. Universities remarkable attention on fighting climate change contributed to the decision for the European Union to endorse the mission to win the “hearts and minds” of Europeans to safeguard the Planet and future generations. Even on the other side of the Atlantic, the Biden Administration has announced a revolutionary plan [1] to make America fighting climate change. Universities contributed since their business is “socially-intensive” education and so because their core business is naturally ESG-intensive.
Colleges endowments (CEs) are an intriguing example to be shown in this sense. Higher Education fees, state contributions and scholarships are fixed-term investment sources to them. This makes the case for CEs managers to make investment decisions upon a perpetual time horizon, with sustainability purposes and (of course) profitable return-seeking strategies. Given that perspective, Yale Endowment’s investment strategy has outperformed not only its Ivy League peers in 2018 [2] but also Warren Buffet’s upper crust, Berkshire Hathaway, in 2004, thanks to the Yale’s Endowment Chief Investment Officer David Swensen’s U-turn to ESG, private equity and venture capital asset allocation at the same time [3].
Source: The Harvard Crimson
Source: Yaledailynews
Admirable choices do not come always from the Ivy League: an outsider (but still top-ranked) higher education institution, the Carlisle-based Dickinson College made an incredible effort by committing to carbon neutrality around 10 years ago [4] and successfully making it as planned [5]. In the UK, CEs have always made clear-cut choices towards the G(reen) variable. This is the case of the University of Sussex, whose plans to become the greenest university in the UK are well-known and reported annually in the University SDGs document [6].
As a result, Colleges endowments are not becoming institutional investors. This is what they have always been. Sustainable finance must now recognise it. Hopefully, they will also become a catalyst for the sustainable bounce exit strategy from the worldwide shrinking, caused by the pandemic.
Fonti:
[1] Joebiden.com (2020) “The Biden Plan for a Clean Energy Revolution and Environmental Justice”. Url: https://joebiden.com/climate-plan/
[2] Lorenzo Arvanitis (2018) “Yale endowment returns exceed Ivy League average”. Yale Daily News. Url: https://yaledailynews.com/blog/2018/10/30/yale-endowment-returns-exceed-ivy-league-average/
[3] Liz Peek (2006) “Yalie’s Letter rivals Warren Buffet’s – Is David Swensen the new Warren Buffett?”. Url: http://web.invest.yale.edu/dave-media/New_York_Sun_05_2006.htm
[4] Brian Wingfield Forbes.com (2010) “America's Greenest Colleges And Universities”https://www.forbes.com/consent/?toURL=https://www.forbes.com/2010/11/10/americas-greenest-colleges-business-beltway-green-colleges.html/
[5] Craig Laine (2020) “Dickinson college achieves carbon neutrality” https://www.dickinson.edu/news/article/4179/dickinson_college_achieves_carbon_neutrality
[6] University of Sussex (2020) “Sustainability and Sustainable Development Goals Report – Building a Greener, Better World”. Url: https://www.sussex.ac.uk/about/documents/university-of-sussex-sustainability-and-sustainable-development-goal-report-nov-2020.pdf