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Trusteeship Magazine

Findings of the Commonfund Study of Responsible Investing

By David Bass

A new study conducted by Commonfund Institute in partnership with AGB and the National Association of College and University Business Officers (NACUBO) provides detailed insights into the way colleges, universities, and affiliated foundations are employing responsible investing practices, as well as the perspectives of boards and investment committees on the topic. Two hundred American colleges, universities, and affiliated foundations participated in the Commonfund Study of Responsible Investing, representing 123 private and 77 public institutions (including public institution foundations) and reflecting a spectrum of endowment sizes.


The study usefully defines and distinguishes among different responsible investing practices, and its findings included the following:

Socially responsible investing (SRI) is employed by 20 percent of respondents and entails excluding certain stocks or industries for ethical reasons.

Environmental, social, and governance (ESG) investing, incorporating ESG factors in investment analysis and decision making insofar as they are material to investment risk and performance, is practiced by 8.5 percent of study participants.

Only three responding institutions engage in “impact investing” by investing in projects, companies, funds, or organizations with the express goal of generating and measuring mission-related social, environmental, or economic change alongside financial return.

Only three survey participants reported divestment of fossil fuels, despite its prominence in the news media.

The 2014 NACUBO-Commonfund Study of Endowments, which included data from 832 institutions, found higher rates of responsible investing, with 14 percent employing ESG, 25 percent employing some sort of screen or SRI practice, and 15 percent allocating a portion of endowment to investments furthering the institution’s mission.


Just over one-quarter of respondents currently have an investment policy statement that permits or refers to responsible investing practices. Six percent have decided to exclude responsible investing practices when managing the endowment, 75 percent said their board has not made such a decision, and 19 percent were unsure or had no answer.

The vast majority (83 percent) identified the investment or finance committee as the entity that develops and oversees responsible investing policy. Thirty-six percent identified investment staff as having jurisdiction over responsible investing policy.

Just over one-quarter of respondents have met with third-party stakeholders about responsible investing considerations, just over one-half had not, and just under one-quarter gave no answer or were uncertain.

One point of concern is the comparatively low level of board engagement and education on this topic. Only 20 percent of respondents reported that their boards had “substantial” involvement with the issue, while 58 percent reported “some” engagement, and 16 percent reported that their board had no engagement with responsible investing.

Potential Changes

Boards remain largely uncertain about the investment implications of responsible investing, and institutional practices are evolving. When asked whether the integration of ESG factors into the investment process can add value to decision making regardless of missionrelated reasons, 21 percent agreed or strongly agreed that it could, over half neither agreed nor disagreed, and 16 percent said they did not know or were uncertain. Sixteen percent indicated that their institutions are considering the implementation of new or additional responsible investing practices, almost one-third did not know or were uncertain, and 45 percent were not planning to take further action.

ESG practices were the subject of lively discussion at AGB’s 2014 and 2015 Foundation Leadership Forums. One point that emerged is that boards’ interest in ESG investing is not driven solely by student activism, but also by concerns about campus sustainability. See the related article on green revolving funds here for one approach that leverages endowment to address campus sustainability.



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