In our Report Card, endowment policies are seen as an important component of a college’s sustainability efforts. We perceive transparency, investment, and shareholder decisions as expressions of a school’s financial values and priorities.
A recent global analysis of fiduciary responsibility offers a new rationale for school trustees to take sustainability into account. A Legal Framework for the Integration of Environmental, Social and Governance Issues into Institutional Investment was prepared for the United Nations Environment Programme by Freshfields Bruckhaus Deringer, the world’s third-largest law firm. The report indicates that—as part of their charitable mission to benefit society—trustees of nonprofit organizations "may be required to consider whether the investment decision would further, or at the least, not hinder, those charitable purposes."
In implementing such sustainability guidelines, university endowments enjoy certain advantages. As noted recently by The Economist, university investment managers control "extremely patient" capital due to an investment horizon that lasts "forever." Furthermore, university endowments benefit from an ethos of innovation—financial and intellectual. These factors emphasize the importance of sustainability as a vital criterion in determining use of scarce resources in endowment decisions, as well as in campus management.