With the changes, HSU joins a small group of institutions nationwide that are looking beyond their direct investments to focus on the more difficult challenge of mutual funds. They include, according to tracking by the group 350.org, Pitzer College in Southern California and Sterling College in Vermont.
The effort is in part a response to a national, student-led push for universities to divest their endowments from fossil fuels. It is also a natural fit with the University’s long-standing commitment to sustainability, and has been advocated for by students locally.
“We’re a small school with a relatively small endowment, but we have a long history of leading in social responsibility, in particular, advancing change in environmental stewardship,” said Heather Bernikoff-Raboy, an HSU alumna who recently became Chair of the University’s Advancement Foundation, which oversees the endowment. “We heard the students, we agree with them, and we are proud to have worked with them to get to this point.”
Humboldt State is already at the forefront of socially responsible investing. Unlike at many universities, its Foundation has never included direct investments in the concerning sectors.
The Board previously adopted an “Investment Pledge” in the spring, which was a broad commitment to more strongly consider the social and environmental impact of how the endowment is invested. Following up on that, the Board took a number of steps at its October meeting, including:
- Directing that 10 percent of its overall portfolio, including mutual funds, be shifted to “green funds”—those with no holdings in fossil fuels or other concerning sectors. The goal is to complete this over the next year.
- Reiterating a long-standing policy of having no direct investments in fossil fuels or other concerning sectors.
- Committing to create a new fund that will be invested entirely free of fossil fuels or other concerning sectors. The distributions from this fund will be used for campus-based sustainability projects.
- Directing its Development Committee to explore creating a “Green Challenge” in which every $500,000 donated to the permanent endowment will allow shifting another 10 percent of the portfolio to green funds. The Foundation’s financial advisors estimate this would make up for the slightly lower earnings of the green investments.
Many students and alumni who had advocated for the changes, and had worked for months with the Board’s Finance Committee, were on hand for the full Board’s long discussion. They continued to urge the Foundation to do more, particularly in relation to fossil fuel divestment. But they also thanked the Board for taking strong steps forward.
Annette Penny is an HSU student who has pushed for fossil fuel divestment and also now serves as a student representative on the Advancement Foundation Board. She recently submitted a blog post about the campus effort, which is being considered for publication by 350.org. In it, she recounts some of the reasons for her advocacy – including sending a clear message about “haphazardly extracting finite resources from the Earth in unnecessarily destructive ways.”
“It’s true that divesting will not topple the industry,” Penny writes. “Heck, it probably won’t be any more aggravating than a buzzing bee. That’s the thing about divesting though, is that it can be done nonchalantly in order to reduce risk. Or it can be done in a loud and proud manner in a way that isn’t a single buzzing bee, but a swarm that stings and flaunts the message to the industry that ‘we do not support your destructive nature nor will we tolerate it any longer!’ ”
The HSU Advancement Foundation has never held direct investments in fossil fuels and other concerning sectors.
Its goal now includes expanding to indirect investments in mutual funds. It’s a much more complicated effort, and one that has proven to be a challenge for universities and other organizations looking to target their investments in a more responsible way. That’s because mutual funds provide a low-cost way to reduce risk, particularly for smaller endowments, but they also include holdings in a wide variety of companies that investors don’t directly choose.
The ambitious goals include a broad definition of “concerning sectors” and “fossil fuels.” The sectors include those traditionally seen as socially concerning – defense, alcohol, casinos, and tobacco – while the fossil fuel sector definition is much broader than typical, including not only companies involved in extraction, but those that sell energy, provide equipment, and support the industry through various services.
Identifying investments that work within the standards required months of new research and analysis by the Foundation’s financial advisor.
“It’s true that we can’t fix things overnight. Right now, today, we all pay some of these companies that are using fossil fuels to heat our homes, and most of us depend on fossil fuels for transportation,” said Duncan Robins, a member of the Board’s Finance Committee who took the lead in developing the new policy and approaches.
“But we can imagine a future when that’s not true, and taking action now is part of making that future a reality,” Robins said. “Someday we want to tell our grandchildren and our great-grandchildren that we did what we could. When we were confronted by the reality of climate change, we tried to be part of the solution.”
The decisions at the October meeting follows the Board’s April adoption of a new “Social and Environmentally Responsible Offset and Mitigation Policy.” It’s known as the “Investment Pledge” in recognition of the Graduation Pledge of Social and Environmental Responsibility, which was created by HSU students almost three decades ago and is now used at nearly 100 universities worldwide.
The policy lays out a ten-point pledge with broad goals to guide future investment activity. It reads:
The Humboldt State University Advancement Foundation will:
1. Define Socially or Environmentally Concerning Sectors (“Concerning Sectors”) in a broad, bold way so as to include: a) Energy – extraction, distribution, refining and marketing (i.e. Oil, natural gas, coal and related/supporting industries); b) Utilities – electricity generation (i.e. Utilities utilizing carbon-based fuels); c) Aerospace/Defense, Alcohol, Tobacco, Gaming and Casino industries. Revisit definition and revise as appropriate over time.
2. Continue to abstain from any direct investment in Concerning Sectors.
3. Monitor and report on the value of indirect investments in Concerning Sectors.
4. Make reasonable attempts to reduce the size of indirect investments in Concerning Sectors provided any divestments are consistent with the Foundation’s fiduciary requirements.
5. Define Socially or environmentally Responsible (“SER”) organizations, projects or assets initially as ones which: a) Are environmentally friendly (i.e. reduce the levels of atmospheric C02) or; b) Improve the health and well-being of our community members. Revisit definition and revise as appropriate over time.
6. Actively seek offsetting investment opportunities in SER organizations, projects or assets.
7. Invest directly in SER organizations, projects or assets provided that: a) Investments meet the Foundation’s fiduciary requirements and policies. b) Investments support the stated HSU mission, vision and values.
8. Monitor and report on the value of direct investments in SER assets and active investments in SER organizations or projects.
9. Monitor and report on the value of obvious indirect investments in SER organizations, projects or assets.
10. Create a SEROP Fund (with appropriate policies) and actively seek donations of funds and assets that could be used to support Humboldt’s SEROP Pledge.
Humboldt State University has a longstanding commitment to environmental and social responsibility. The Princeton Review regularly lists HSU as a top “green college,” and the university’s Graduation Pledge has been adopted by campuses worldwide. HSU houses one of the nation’s oldest eco-demonstration houses, students pay an extra fee for campus energy projects, and classes throughout the curriculum feature topics related to sustainability. The University also recently banned the use of plastic shopping bags and the sale of plastic water bottles on campus. More information is at humboldt.edu/green.