Socially Responsible Investing

December 10, 2018

Dear Students, Faculty, Staff and Administrators:

At its meeting last Friday, Gonzaga University’s Board of Trustees considered recommendations from the Investment Committee regarding our University’s Investment Policies and Guidelines for the Endowment.  In August 2017, an Environmental, Social and Governance (ESG) Task Force of the Board’s Investment Committee was established to study the implementation of socially responsible investing – including the evaluation of student and faculty advisory recommendations to divest from fossil fuel companies – and propose investment strategies that best reflect Gonzaga’s Mission.

At last week’s meeting, the Board approved important changes to the investment strategy to reflect the University’s concern for the care of our planet, sustainability, and commitment to social justice. The enhanced strategy balances the call of our institutional Mission, the University Strategic Plan, and our Climate Action Plan to operate in a sustainable manner with the perpetual need to maintain a diversified endowment portfolio designed to optimize net investment returns, which is essential to make a Gonzaga education affordable.

Gonzaga’s sustainability efforts are rooted in our Jesuit, Catholic mission to “…care for the planet [and carry] out this mission of responsible stewardship of our physical, financial and human resources.” The care for our planet is also of great importance to the Catholic Church, as expressed in the papal encyclical on the care of our common home, Laudato Si’.

The concept of divesting from “the 200 most carbon-intensive companies” as proposed by a May 2017 Gonzaga Student Body Association Resolution was taken very seriously by University leadership, the ESG Task Force, the Investment Committee and ultimately the Board of Trustees. At the same time, these groups also carefully considered the complexity of this issue, weighing the impacts of specific actions, such as divestment, upon the University, the environment and society. This resulted in the Task Force making recommendations that represent a holistic investment approach for creating positive, measurable impact.

The Task Force recommended – and the Board of Trustees agreed – that an intentional commitment to invest in companies that are implementing ways to reduce carbon emissions and have sustainable business practices is more impactful and financially responsible than blanket divestment from the Top 200 list.

Here are the socially responsible investment strategies approved by the Board:

  1. Develop specific positive impact investment objectives and allocate a portion of the endowment toward such investments. The Investment Committee will target approximately $10 million towards new investments in funds or companies that reduce carbon emissions and greenhouse gases, promote social responsibility, and seek solutions for climate change. 
  2. Measure and evaluate current and prospective fund investments, as well as the underlying companies within funds, against socially responsible investing criteria. All equity funds, as well as the underlying company holdings within each equity fund, will be evaluated using new socially responsible investing criteria designed to quantitatively and qualitatively measure environmental and social risks and opportunities. Such measurement will compliment other relevant information used by the Investment Committee to make investment decisions. Those equity managers who measure poorly using this new criteria are less likely to be a component of the Gonzaga endowment investment portfolio moving forward.
  3. Communicate to investment managers the University’s view on the importance of socially responsible investing. On an annual basis, formally convey to all of the investment managers within Gonzaga’s endowment investment portfolio our mission and the importance we place, as a University, on having our values reflected in our investments. This effort builds awareness among our investment managers and promotes Gonzaga’s environmental and social concerns.
  4. Create transparency in how the Investment Committee is fulfilling its commitment to socially responsible investing. Deliver an annual report of the actions taken by the Investment Committee in fulfilling socially responsible investing responsibilities. Provide opportunities for members of the Gonzaga community to review and offer feedback, observations and suggestions.
  5. Revise the Endowment Investment Policy where needed to add clarity. Make necessary revisions to the Endowment Investment Policy to incorporate these recommendations.

For background on the proposed concept of divestment and the work of the ESG Task Force, please refer to this FAQ.

I am sincerely grateful to everyone in our campus community who continues to make the care for our planet an imperative and whose voices have helped achieve this exciting direction for socially responsible investing. In addition, I am appreciative of University leadership – including the ESG Task Force, Investment Committee, and Board of Trustees – who demonstrated a research-based, balanced approach to a complex issue, centered on the University’s values.

This decision constitutes an important step forward in creating a socially responsible investment strategy for university investments.  Early in the spring ’19 semester there will be a campus forum to share more about this decision. Please plan to join in the conversation and learn how you can help build out the strategy.  We look forward to your questions, ideas and further dialogue. 

Sincerely,

Thayne M. McCulloh, D.Phil.
President


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