Student investment funds prioritize sustainability: report

by Jeremy

Dive Brief:

  • Higher education institutions are gradually adopting sustainable investment strategies. Still, according to a recent report from the Intentional Endowments Network, some student-led funds are leaning in, which advocates for using approaches that address climate change and social equity.
  • I examined 40 student-managed investment funds, or SMIFs, that use sustainable investment strategies in its network of schools. Just under half of the funds were supported with donations. A similar share (41%) was part of their college’s endowment. And about half were managed as part of a course, while a third was run through a club.
  • Colleges continue to incorporate these strategies across their investment portfolios, and the pandemic’s economic impact could provide the impetus for the change.

Dive Insight:

Sustainable investing practices have been gaining steam. Colleges are going beyond reconsidering which types of industries they are investing in. They are also reexamining how those industries and the businesses within them treat the environment, society, and workforces and how those non-financial factors can affect their performance — a strategy sometimes referred to as ESG.

More than $17 trillion of assets were being managed with ESG strategies at the close of 2019, up 42% from 2018, according to a report from US SIF, which advocates for sustainable investing.  One-quarter of the funds IEN surveyed focused primarily on ESG, while a similar share emphasized impact investing when making decisions. The 40 SMIFs held $68 million in assets, representing about 10% of all SMIF assets under management in the U.S.

IEN’s report highlights how a few SMIFs are using these strategies.

A student-led impact investment fund at Portland State University created in 2019 puts money behind local companies that emphasize environmental or social change. According to the report, donors seeded the fund with $160,000, and the college has plans to raise another million through donations and grants.

A similar SMIF at Northeastern University in Massachusetts was founded in 2016. Its students invest in Boston-based companies that are looking to address social and environmental challenges.

Many colleges had their SMIFs adopt a sustainable investment philosophy following the Great Recession, the IEN report notes. A similar trend is playing out during the coronavirus pandemic, with experts predicting that higher education institutions will lean into sustainable investing across their portfolios during the health crisis.

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