Investment Information and Sustainability Performance

Sustainable investing is a broad term that encompasses several different investing strategies in which investors aim to achieve financial returns while considering the environmental and social impacts of their investments. 

ESG stands for environmental, social, and governance—and relates to the factors many sustainable investments consider in their goal of achieving more values-based, socially responsible, or sustainable investments.  
 
Environmental factors can include a company’s total greenhouse gas emissions or waste practices. Social factors can include a company’s health and safety practices or its attention equity and diversity. Governance factors can include the composition of a company’s board of directors and how transparent a company is about its business practices. Most sustainable investing strategies rely on ESG data and performance to make decisions about where to invest.

No; some sustainable investment funds choose to hold fossil fuel or energy companies in their portfolios because, as shareholders, they are given the opportunity to engage with those companies on their activities and long-term strategies. 

Currently, over half of the Foundation’s endowment investment portfolio ($61.3 million) is currently invested in a Sustainable Multi-Asset Growth Fund which considers environmental, social, and governance (ESG) factors in the security selection process and emphasizes holding stocks that reduce the carbon footprint of the portfolio by 50% compared to a market index. The Sustainable Multi-Asset Growth Fund excludes investment in coal, tobacco, firearms weapon companies, private prisons, and predatory lending companies; the Fund emphasizes investment in companies participating in the energy transition, such as companies related to wind power generation.   
 
The remaining investment funds are spread across a diversified range of assets which include bonds, private equity investments, and real estate. The Foundation has no direct investment in any fossil fuel company—and any indirect holding it may have is at the discretion of the Foundation’s investment manager, or as a result of participating in broad indexes such as the S&P 500, and does not imply support for such companies.  

Russell Investments, based in Seattle, manages the Foundation’s endowment and operating funds. 

The Finance Committee of the Foundation Board considers its relationship with the current investment manager every five years and makes decisions whether to proceed with a formal Request for Proposal (RFP) process. 

After considering the current relationship with Russell Investments, the Foundation Board’s Finance Committee has decided not to pursue a formal RFP process in 2024. During the 2018 RFP process, Russell was identified as head and shoulders above its peers as a values-aligned partner in terms of its ability to provide thoughtful and sustainable investment strategies, and the Foundation has been happy with this partnership. The Foundation Board does, however, plan to request information from Russell and at least two other advisors to stay abreast of general market updates and best practices. The due diligence process includes requests for each advisors’ commitment to sustainable and ESG investing. There is no requirement for the Foundation to host a formal RFP process or change advisors every five years.

It has been noted that other institutions have publicly committed to fully divest their portfolios from fossil fuels and that WWU is falling behind in its commitments to sustainability. These commitments speak to a full divestment from all direct investments held in fossil fuels. The Foundation for WWU & Alumni has no direct investment in any fossil fuel company. Board members, staff, and the investment advisors to the Foundation must balance the fiduciary duty associated with stewarding investment funds with the commitment to seeking positive environmental and social impact; this balance is always carefully considered, and always top of mind. 

When a person holds a direct investment in an asset, they have purchased and own the asset, such as a stock or a piece of real estate. With indirect investment, the investor does not directly own the underlying assets but instead owns a portion of a fund that owns the assets, such as a stock held within a mutual fund. 

Due to the endowment’s relatively small size in comparison to other universities, our endowment invests through “commingled funds” which are funds that institutional investors can purchase, but that are not available to the general public. Commingled Funds are similar to mutual funds, but on an institutional level.
 
The Foundation invests almost entirely in these types of funds because they are efficient (i.e. low fees), diversified, and well-managed. The offset is that these funds are owned by many investors just like our Foundation and so the fund must appeal to many investors. Also, managers of these funds do not want to be too constrained by specific exclusion criteria, so these funds often do have some degree of fossil fuel investments in them.  

It is important to note that the Foundation has no direct investment in any fossil fuel company. Other University endowment funds—typically those that are much larger than WWU and who may employ a Chief Investment Officer and investment team— may have direct investments in fossil fuel assets, and their commitment to divestment typically means they plan to phase out those direct investments.

The Foundation does not make any direct investments. Many of the schools that have committed to fossil fuel divestment have committed to divest their direct investment portfolios, but they cannot commit to divesting their commingled portfolios since they have very little control over the investment decisions in them. This is the situation the Foundation is also in since we are almost exclusively invested in commingled funds. The creation of the Sustainable Multi Asset Growth Fund was a huge step toward introducing ESG into our commingled portfolio, and through this fund, our fossil fuel exposure is significantly less than a traditional commingled fund. The Fund excludes investments in coal, tobacco, firearms weapon companies, private prisons, and predatory lending companies; the Fund emphasizes investments in companies participating in the energy transition, such as companies engaged in wind power generation. The Foundation for WWU & Alumni takes great pride in being the inaugural client for this fund in 2019 with a $50.0 million commitment. Today, the fund has over $400 million of investments from various clients.

Starting in 2024, The Foundation for WWU & Alumni will produce an annual report that shares financial and sustainability performance of its investments, including progress on key sustainability metrics.  

The staff of University Advancement is working closely with other divisions to implement the goals included in the University’s Sustainability Action Plan and is committed to exploring opportunities in which to improve our sustainability performance going forward. The Foundation additionally supports communication regarding the investment process and sustainable investing more broadly. To learn more about WWU’s initiatives in financial literacy please visit the Paul Merriman Financial Literacy Program.