Apr 30, 2014
Humboldt State University’s charitable foundation has adopted an expansive new policy to strictly limit its holdings in a variety of industries, including companies directly or indirectly involved in fossil fuels. And through its “Humboldt Investment Pledge” is urging other foundations to do more to clean up their investments.
The HSU Advancement Foundation’s Board unanimously adopted a new “Social and Environmentally Responsible Offset and Mitigation Policy” and took the Humboldt Investment Pledge at its most recent meeting on April 25.
Humboldt State’s Advancement Foundation has a longstanding practice of making socially responsible, direct investments while closely monitoring the social impact of its indirect investments. For over a decade, the Foundation has operated without any direct investments in fossil fuel-related industries, making it a leader in the more recent fossil fuel divestment movement.
Despite its socially responsible investment record, HSU’s Advancement Foundation Board adopted the stricter policy following extensive meetings with students and other parties who were intent on seeing the Foundation do even better. The policy also builds on the university’s campus-wide commitment to sustainability. Its inclusion of a pledge was inspired by the university’s 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.
“We could have recommended the status quo, continuing our investment practices that are already more socially responsible than most other institutions. But that isn’t enough for this Board, our students, or our community,” said Duncan Robins, a Board member on the Finance Committee who helped lead the development of the new policy and pledge. “We want to prove that it is possible, even for a relatively small endowment like ours, to do even better,” Robins said. “We won’t be perfect, but we will try to set a positive example for others to follow.”
The policy lays out a ten-point pledge with broad goals that will guide future investment activity. The policy 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.
Robins said the student voices and energy on the issue were vital. A student group first approached the Board about divesting from fossil fuels last fall, and since that time has continued to meet with the Board’s Finance Committee to work on details. The Board was inspired by their understanding of the issues and commitment to making a difference.
As discussions with the students and other parties progressed, a policy emerged that focused on much more than a small number of oil companies. It became a policy to discourage investment in all companies either directly or indirectly involved with extracting and using fossil fuel, and one aimed at challenging the Foundation to take more proactive steps going forward. In a stroke, the Foundation is now concerned with the social impact of many more companies in its mutual fund portfolios – nearly 10 percent as opposed to less than 1 percent under a more typical measure of social responsibility.
“The policy provides a great framework to make investment decisions and it’s a huge step forward from what I’ve seen of previous socially responsible investment policies,” said Eric Recchia (‘13, Economics), an HSU alumnus involved in the effort. “This creates both the framework and the internal motivation for the foundation to take further action and start making a difference.”
While students did not see immediate action on everything they had wanted—such as dedicating a percentage of the Foundation’s investments to green funds, or including prisons as industry investments to avoid—Board members and Executive Director Craig Wruck said that all those ideas, and many others, could be explored now that the new investment policy was in place.
“We needed the framework of this broader policy first in order to allow us to do the detailed work,” Wruck said. “It was tempting to add specific actions, to set new ambitious timelines, and decide on certain types of investments at the same time. But we need to do this right. We are committed to leading the way on this, but where there are tradeoffs such as possibly reducing the amount of scholarship dollars available, we have to really spend time thinking it through.”
Ultimately, the policy with the Humboldt Investment Pledge was something that Board members said they were proud to adopt, and they did so unanimously. The Board’s Finance Committee will now utilize the framework to make adjustments and changes to its investment strategy, and to make further recommendations to the full Board.
_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.