U.S. college campuses are at the forefront of a major investing sea change, and the University of Illinois (U of I) System is a leader in exemplifying how sustainable investing can outperform traditional ones, according to a new study by the Intentional Endowments Network (IEN).
Sustainable Investing Program yields $252 Million
The study details how two years after establishing a program to incorporate environmental, social and governance (ESG) factors into investment decisions, an initial allocation of $160 million has grown to $252 million, returning 47% on an annualised basis and outperforming its benchmark (Russell 3000) by 1.2%.
In 2020, U of I System President Tim Killeen announced the Empowering Excellence: Financial Stewardship through the Responsible Investing program.
The program was formed based on the U of I System’s Guiding Principles and the Illinois Sustainable Investing Act after engaging with students, faculty, alumni and other key stakeholders such as IEN.
“The University of Illinois System is one colleges and universities can consider as pressure from students, faculty and alumni mounts to clean up endowment portfolios,” said Georges Dyer, executive director of the Intentional Endowments Network.
“Not only is it the right thing to do for people and the planet, but the U of I System shows that it makes good financial sense as well.
“It’s my hope that other institutions follow Illinois’ lead and begin to create sustainable value for their endowments and future generations.”
The University of Illinois System’s program includes six core initiatives across asset classes: seeding an ESG Insights strategy managed by BlackRock, active ownership, sustainable farming practices, private market impact funds, industry advocacy and student engagement.
The program also builds on the U of I System’s long-standing commitment to increasing allocations to diverse-owned and -led investment management firms.
The new IEN report takes a closer look at each of the core initiatives, concluding that the program “provides a compelling approach for endowment leadership on mission aligned investing.”
“Our process has shown that there are opportunities to move toward mission-aligned investing across the portfolio in ways that protect and enhance financial returns,” said Geri Melchiorre, senior director of investments for the University of Illinois System.
“We are pleased to share our progress to date in this new report from IEN as we continue to engage with our students and the broader community on these topics.”
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