Responsible investment allows institutions like colleges and universities to ensure that their investments are aligned with their values and take social and environmental factors into their decision-making processes. Many institutions have made commitments to diversity, the environment, their workers and local communities. They also have an obligation to operate across generations in perpetuity.
These commitments can and should be reflected in their investment policies. The status quo, unfortunately, means investing without regard to the environment, worker treatment and safety, employee policy and structure, and many other issues.
Colleges and universities have many opportunities to align their investments with their values. These include:
- Engaging in active ownership, also known as shareholder advocacy, by attempting to change the practices of the companies they invest in to lessen impacts or improve outcomes for people and the environment;
- Making proactive investments in companies and projects that align with the institution’s mission, such as clean technology or affordable housing, or hiring managers to make proactive investments; and
- Screening out or divesting from particular industries, such as in tobacco, fossil fuels, or conflict minerals, where such investments would support activities against the school’s values.
Responsible investment benefits everyone: schools are able to make investment returns needed to fund quality education, alumni feel good that their donations are being managed in line with their values, and students know their education has not been funded unethically. Most importantly, responsible investment benefits the communities, people, and environments that are negatively impacted by status quo investment decisions.
Given the tremendous power of money, and the fact that over $400 billion is managed by colleges and universities, the need for responsible investment is urgent. Investments and the flow of money touch on every aspect of our lives.