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Students' calls for institutions to stop supporting the fossil fuel industry and start investing in more eco-conscious companies have been ongoing for years but don’t show any signs of dying down.

Just last week, students at Cornell University staged a mock wedding between a six-foot-tall cutout of the university’s clock tower and a cardboard businessman wearing a hat inscribed with the words “big oil,” as part of a series of continuing protests. Administrators at Cornell did not promise to change their investment portfolio in response to student activism, but the issue of fossil fuel divestment will be considered by the institution’s shared governance groups, they said. This pledge, however, came with a warning that divesting from oil, coal and gas companies would take many years and “could have significant economic costs for the university.”

Cornell is far from the only institution to come under pressure from students to divest from fossil fuels. Activists rushed onto the field at the annual football game between Harvard and Yale Universities in December. Leaders at the two institutions have indicated that they do not support divestment, but the pressure is only increasing. Harvard Forward, a pro-divestment group, was recently successful in placing five candidates on the 2020 Board of Overseers election ballot. Harvard Forward's platform advocates for the university to divest all its assets from fossil fuels and develop more transparent investment guidelines.

Calls to divest from fossil fuels are often met with resistance from critics, who say such considerations will undermine investment returns. The fear that divesting from fossil fuels will yield lower returns is pervasive among university leaders, said Georges Dyer, executive director of the Intentional Endowments Network -- a membership organization for higher education institutions pursuing so-called sustainable investment strategies.

The network published a report Wednesday highlighting research findings from academics and practitioners that show sustainable investment strategies, “in general, perform as well or better than traditional approaches.” Featured research findings include a July 2018 article published by the Institute for Energy Economics and Financial Analysis and the Sightline Institute. The article acknowledges that fossil fuel companies have historically provided strong investment returns but says they stopped offering a significant advantage in the 2013 to 2018 period.

In addition to summarizing existing research, the report shares case studies of 11 institutions that are attempting to build environmental, social and governance, or ESG, factors into their traditional investment evaluations. In some cases, the changes were introduced as recently as six months ago and therefore do not provide a definitive long-term view. But the report indicates the early results are promising.

Institutions pursuing sustainable endowment investing strategies featured in the IEN report follow:

  • Arizona State University
  • Becker College
  • California State University
  • College of the Atlantic
  • Rhode Island School of Design
  • Hampshire College
  • North Carolina State University
  • Unity College
  • University of New Hampshire
  • University of California System
  • Warren Wilson College

Arizona State University, for example, reported that its $100 million Sustainable, Responsible and Impact investment pool, established in July 2019, has outperformed non-ESG-oriented strategies since its launch. Jeff Mindlin, chief investment officer of the Arizona State University Foundation, acknowledged that it has been “too short a time frame to draw significant investment conclusions,” but he said he is encouraged by the performance of the fund as well as the “growing sophistication and availability of products in this space that allow us to build a portfolio that doesn’t need to sacrifice returns in order to align with our mission.”

The case studies are not intended to be a comprehensive review, “nor provide the definitive last word on this important area of study,” the report said. “But for endowment fiduciaries asking whether they can implement mission-aligned strategies without sacrificing financial returns, these examples demonstrate that it is possible to take a thoughtful approach … and maintain or improve investment performance.”

A working paper published in January by authors Christopher J. Ryan Jr. and Christopher R. Marsicano looked at hundreds of college and university endowments in order to compare the returns on funds that did not divest from fossil fuels versus those that did. The authors were not able to conclude that divestment has a discernible effect on endowment returns. The Independent Petroleum Association of America, which warns of great financial losses from divestment, said the analysis was flawed. Some universities have, however, recently announced plans to explore divestment -- Georgetown University announced plans to stop making new investments in fossil fuel companies earlier this month.

Dyer described the new report released Wednesday as the first to share real-world case studies of colleges implementing sustainable investing strategies and meeting financial performance targets.

“This is what university and college endowment professionals need to see in order to proceed with confidence,” he said. “It shows that endowments large and small can invest for a low-carbon, sustainable future, in ways that reduce risk, enhance returns and protect their reputations.”

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