Student Run SRI Endowments

The proverbial holy grail of responsible investing for endowments is a proactive strategy to target responsible assets and deploy capital to promote them and hopefully earn a return. The issue with this strategy is the general consensus that they will underperform traditional investment strategies by limiting the scope. Although most universities have responsibility deeply embedded in the verbiage of their missions, the fear of sub-par return on their endowments has caused them all to abandon their principles in their investment strategy.

One solution to this dissonance is to provide concrete examples of Socially Responsible Investment funds that either match or exceed the returns of traditional funds. At the REC conference last weekend, Thomas Meyer presented a case study of how a dynamic group of Yale students has worked with the system to try and provide a concrete example for endowment fund managers everywhere.

As the students set out to build their fund they developed strong alliances with the board of trustees of a separate smaller endowment as well as investment professionals in order to gain legitimacy. Meyer commented that it is important to be perceived as professionally as possible when working with the board of trustees, especially surrounding investment decisions.

After a long process, the students were granted a $50,000 fund “focused on socially responsible investing” that would have “active participation of the students of Dwight Hall [the smaller endowment invested with Yale University]”. The students have spent over a year planning their investment strategies, and just a few weeks ago placed their first investment. Hopefully the success of this fund inspires managers across the country to begin incorporating SRI into their investment strategy!

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