Sustainable Investing

Sustainable Investing & Intentionally-Designed Endowments

Conference Proceedings
Additional Resources


Over the past two years there has been a dramatic increase in focus on the investment practices of college and university endowments. In response, on April 3-4, 2014, Second Nature and Hampshire College hosted the Intentionally Designed Endowment conference. We convened a diverse group of high-level stakeholders to explore how they might better align their endowment portfolios with their mission and values. While fossil fuel divestment campaigns have driven much of the recent attention on endowment investing, this was not a divestment event. Our purpose was to explore the full range of options available to trustees, administrators, and their investment managers and advisors related to enhancing endowment portfolio value without compromising the institutions’ values.

The conference facilitated peer-to-peer learning and provided access to expert knowledge – both in terms of sustainable investing, and effectively engaging stakeholders and leading organizational change. The event offered a highly interactive venue with experts in investment management, fiduciary responsibility, sustainability, and organizational change leadership. While the program had a clear initial mission and focus, the program design was based on extensive feedback from registrants before the event. Participants posed these questions in advance:

  1. How does aligning investments with ESG goals fit with our responsibilities as fiduciaries
  2. Is there a financial price to ESG investing, and can we get good return on investment with such alignment?
  3. How are other institutions approaching these issues?
  4. How can we overcome structural barriers in the financial services industry that may impede action?
  5. How can we have constructive conversations about these issues with all our stakeholders?

Through keynote addresses, panel presentations, and interactive dialogue sessions that built upon one another throughout the event, participants made significant progress on these questions. It became clear that:

  • Aligning investment policies with institutional mission and values is allowable within trustees’ fiduciary responsibility, and taking Environmental, Social, and and Governance (ESG) risks into account may increasingly become a requirement of that fiduciary responsibility.
  • There is a growing body of evidence that shows ESG strategies do not require accepting a lower rate of return on investments, and can help reduce risk.
  • There is a need to help key decision makers in higher education, foundations, and other non-profit organizations become more knowledgeable about the role of endowments in fulfilling their missions and to improve their ability for productive dialogue on these issues.

Conference Proceedings  

Conference attendees were given a Primer on intentional investing prior to the conference, which many found to be a useful resource. The Primer covered a background and overview including glossary of terms, as well as status and trends in ESG investing. The Conference Report notes that there was strong demand from participants to continue the conversation started at this event. Attendees also made specific commitments to action – both in terms of steps they will take at their own organizations and ways in which they will contribute to a collective effort.

April 2014 Intentionally Designed Endowment Conference — Videos


Sustainable Investing and Financing Resources



General Guides and Trends

The 21st Century Investor: Ceres Blueprint for Sustainable Investing, Ceres, 2013.  

Investing in the Clean Trillion: Closing the Clean Energy Investment Gap, Ceres, 2014.  

From SRI to ESG: The Changing World of Responsible Investing, Commonfund Institute, September 2013.  

Environmental, Social and Governance Investing by College and University Endowments in the United States: Social Responsibility, Sustainability, and Stakeholder Relations,  IRRC Institute and Tellus Institute, July 2012.  

2013 NACUBO-Commonfund Study of Endowments: Chapter 3, Asset Allocation, Investment Policies, Restrictions and Environmental, Social and Governance (E/S/G) Criteria, NACUBO and Commonfund, 2012.  

Building the Capacity of Investment Actors to Use Environmental, Social and Governance (ESG) Information, Principles for Responsible Investment, March 2013.  

2012 Report on Sustainable and Responsible Investing Trends in the United States, US SIF, 2012.  

The Impact of Sustainable and Responsible Investment, US SIF, September 2013.  

Unleashing the Potential of US Foundation Endowments: Using Responsible Investment to Strengthen Endowment Oversight and Enhance Impact, US SIF, 2014.



Carbon Risk and Fossil Fuel Free Portfolios

Do the Investment Math: Building a Carbon-Free Portfolio, Aperio Group, 2014.  

Stranded Carbon Assets: Why and How Carbon Risks should be Incorporated in Investment Analysis, Generation Foundation, October 2013.  

Beyond Fossil Fuels: The Investment Case for Fossil Fuel Divestment, Impax Asset Management, 2013.  

The Other Reason for Divestment, Robert Litterman, Ensia, 2013.  

Responding to the Call for Fossil-fuel Free Portfolios, MSCI ESG Research, December 2013.  

Climate Change: Investment Risks and Opportunities for Higher Education, Second Nature, December 2013.  

Investing to Curb Climate Change: A Guide for the Institutional Investor, US SIF, 2013. 


Fiduciary Responsibility

A Legal Framework for the Integration of Environmental, Social and Governance Issues into Institutional Investment, Freshfields Bruckhaus Deringer, October 2005. (Produced for the Asset Management Working Group of the UNEP Finance Initiative).  

Is It Prudent to Be Responsible? The Legal Rules for Charities that Engage in Socially Responsible Investing and Mission Investing, Susan Gary, Northwestern Journal of Law and Social Policy, Winter 2011.  

The Time Has Come for a Sustainable Theory of Fiduciary Duty in Investment, Jay Youngdahl, Hofstra Labor & Employment Law Journal, 2012. 



Financial Performance 


Sustainable Investing: Establishing Long-Term Value and Performance, DB Climate Change Advisors, June 2012.


  • Found that 89% of research studies showed that companies with high ESG ratings exhibit market-based outperformance compared to industry peers.

The Impact of Corporate Sustainability on Organizational Processes and Performance, Robert G. Eccles, Ioannis Ioannou, George Serafeim, Harvard Business School, July 2013. 

  • 18-year study (1993-2011) showing that 90 companies with strong sustainability policies outperformed a similar group of 90 companies with low sustainability standards, with a 4.8 percent higher annual above-market average return.

Alpha from Sustainability, SAM Research, Robeco Quantitative Strategies, 2014. 

  • Found that between 2001 and 2010, a portfolio of sustainability leaders in a group of more than 450 companies outperformed by 1.74 percent annually, and weak sustainability performers underperformed by 1.87 percent annually.

Sustainability: Opportunity or Opportunity Cost? Applying ESG Factors to a Portfolio does not Negatively Impact Performance and May Enhance It, RCM Sustainability White Paper, 2011.  

  • Found that a portfolio of top quintile best-in-class ESG companies outperformed the MSCI World Equal Weighted Index by 1.7 percent while the worst-in-class portfolio underperformed by 1.0 percent.

The Financial Performance of SRI Funds Between 2002 and 2009, Olaf Weber, Marco Mansfield, Eric Schirrmann, June 2010.

  • Shows that a portfolio of 151 SRI funds outperformed the MSCI World Index between 2002 and 2009.



Examples of Endowment Approaches on ESG Investing


Stanford University divested its $18M+ endowment from coal-mining companies. 


Pitzer College divests of fossil fuel stocks. One of the first colleges in the country to launch an environmental studies program, Pitzer has promoted environmental awareness for nearly 50 years.

Hampshire College, which first adopted an SRI policy in the 1970s, approved a new policy on ESG investing in December 2011.  

At Harvard University, a 2012 student referendum calling for divestment passed with 72 percent of the vote. In 2013, Harvard hired its first Vice President for Sustainable Investing, responsible for researching and understanding ESG issues related to the endowment, and established a Social Alternative Fund. In October 2013, President Drew Faust released a letter outlining Harvard’s rationale for not divesting from fossil fuel companies. An Open Letter: Faculty of Harvard University to the President and Fellows, Harvard Faculty, April 15, 2014.

Middlebury College underwent a formal process exploring divestment during the 2012-2013 academic year, and concluded there were too many unanswered questions to support divestment at that time, but that it would “increase significantly the amount of endowment directed toward ESG investments,” according to an August 2013 statement from President Ronald Liebowitz. 

Unity College trustees voted on November 5, 2012 to divest the college’s $10 million endowment from fossil fuels. 

The Responsible Endowments Coalition has a suite of free resources, guides, and case studies online relating to various aspects of sustainability investing for college and university endowments.


Conference Proceedings

Conference attendees were given a Primer on intentional investing prior to the conference, which many found to be a useful resource. The Primer covered a background and overview including glossary of terms, as well as status and trends in ESG investing. The Conference Report notes that there was strong demand from participants to continue the conversation started at this event. Attendees also made specific commitments to action – both in terms of steps they will take at their own organizations and ways in which they will contribute to a collective effort.

April 2014 Intentionally Designed Endowment Conference — Videos


Relevant Organizations


The following is a non-comprehensive list of just a few of the organizations and companies involved with sustainable investing issues.


Non-Profit Organizations

  • – international grassroots effort to raise awareness of the need to decrease carbon dioxide concentration in the atmosphere to 350 parts per million. 
  • As You Sow – promotes environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies.
  • CDP – formerly the Carbon Disclosure Project, represents institutional investors to request information on carbon, forests, water, and supply chains from companies in order to provide investors with reports and data.
  • Ceres – advocates for sustainability leadership that mobilizes investors, companies, and public interest groups to accelerate the adoption of sustainable business practices.
  • Commonfund – institutional investment management firm serving the non-profit and pension investment communities, including a significant outsourced management practice for endowments.
  • Global Reporting Initiative – provides a sustainability reporting framework to help companies measure and communicate sustainability performance information, with the mission of making sustainability reporting standard practice.
  • Interfaith Center on Corporate Responsibility – interfaith-based institutional investment center sponsoring shareholder resolution discussions and SRI; members include faith-based institutions, socially responsible asset management companies, unions, pension funds, and colleges and universities.
  • National Association of College and University Business Officers – national membership association for chief financial officers and other business officers of colleges and universities.
  • Responsible Endowments Coalition – organizes students, alumni, university administrators, and the larger community to challenge and pressure universities to invest their endowments more responsibly.
  • Sustainability Accounting Standards Board – works to establish industry-based sustainability standards for the recognition and disclosure of material ESG impacts by companies traded on US exchanges.
  • Sustainable Endowments Institute – works to advance institutional responses to the climate crisis, focusing on sustainable use of endowment and operations assets; leads the Billion Dollar Green Challenge, encouraging campuses to establish “green revolving funds.”
  • Sustainable Investments Institute – conducts impartial research and publishes reports on organized efforts to influence corporate behavior on social and environmental issues.
  • UN Principles for Responsible Investing – international network of investors working together to put the six Principles for Responsible Investment into practice.
  • US SIF – The Forum for Sustainable and Responsible Investment – a US membership association for professionals, firms, institutions, and organizations engaged in sustainable and responsible investing.

Investment Managers, Advisors, and Financial Services Firms

  • Boston Common Asset Management – investment manager focused on sustainable investing.
  • Calvert Investments – investment management company with SRI products and services for institutional investors.
  • Green Century Capital Management – investment advisor of the Green Century Funds, founded by a partnership of environmental advocacy organizations; includes a fossil fuel free fund.
  • Mercer – global investment consultant firm with a dedicated responsible investment team.
  • Morgan Stanley Institute for Sustainable Investing – an institute committed to investing $10 billion in impact investments and building the field of sustainable investing.
  • MSCI – data provider with a significant focus on ESG; maintains a variety of ESG-related indices and provides research, analytics and ratings.
  • Pax World Investments – investment advisor offering a comprehensive platform of sustainable investing solutions, including separately managed accounts for institutional investors.
  • Sustainalytics – responsible investment research firm specialized in ESG research and analysis.
  • Trillium Asset Management – ESG-focused asset manager with fossil fuel free portfolios.
  • Trucost – environmental data provider.
  • Walden Asset Management – oldest institutional socially responsible investment manager; the SRI practice of the Boston Trust & Investment Management Company.