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Climate Change and the Smith College Endowment
October 23, 2017
Dear Students, Staff and Faculty:
In December 2015, the Smith College Board of Trustees appointed a group of trustees, faculty, staff and students to a re-constituted body known as the Advisory Committee on Investor Responsibility (ACIR). The role of ACIR is to “consult with the Investment Committee on social issues relevant to investing and thereby ensure the endowment continues to be invested in a manner consistent with—and supportive of—the college's mission and values."
To establish a foundation for its work, ACIR drafted principles for socially responsible investing and shared them with the Smith community for review and comment. Those principles were approved by the board of trustees in May 2017. In parallel, ACIR began deliberations on its first substantive matter: the role of Smith’s endowment in the college’s climate-action goals.
As we affirmed in our March 6, 2017, letter, “[c]limate change is an urgent, complex problem. Human activities are pushing the climate beyond the range of conditions experienced over the last few million years and toward abrupt, unpredictable, highly damaging and potentially irreversible impacts.”
The recent report of the collegewide Study Group on Climate Change (SGCC) advised that Smith’s response to climate change be “comprehensive” and set “clear pathways for climate action in the college’s educational mission, operations and finances...” SGCC’s recommendations, developed over the course of a year of study and consultation, identified five major areas in which Smith could take action, including in its investments. SGCC’s endowment-related recommendations, as well as the advocacy of Divest Smith College and the Student Government Association, strongly informed ACIR’s deliberations.
We are pleased to inform you that, at its October 21 meeting, the Smith College Board of Trustees adopted ACIR’s four strategic recommendations regarding climate change and the Smith endowment. As context for these recommendations, it should be noted that the Smith endowment is managed by Investure LLC, the college’s outsourced investment office. Investure’s activities are overseen by the Investment Committee of the board of trustees.
Recommendation 1: Increase impact investing
First, and most significantly, Smith will increase its impact investments—those intended to generate measurable social and environmental change alongside a financial return—from $9.5 million to $30 million, over time. Examples of such investments might be industries and funds focused on sustainable agriculture, renewable energy, energy efficiency, conservation, affordable and accessible services and sustainable manufacturing processes. The Investment Committee has asked Investure to identify such investments. This enhanced commitment to impact investing aligns with values of innovation and social change at the center of the Smith experience.
Recommendation 2: Favor managers and funds adhering to environmental, social and governance (ESG) principles
As of June 30, 2017, 16 percent of Smith’s endowment is invested directly or indirectly in funds with ESG policies via 23 fund managers. The board voted to have the Investment Committee work with Investure to continue to increase the number of funds and fund managers in the endowment who have adopted ESG principles. This decision reflects the recognition that this type of investing can support the college’s broader commitments to environmental sustainability and social equity while still generating appropriate financial return.
Recommendation 3: Avoid future direct holdings in coal
As of June 30, 2017, Smith’s endowment does not have any direct coal holdings. Recognizing that coal is the most environmentally harmful fossil fuel, the board voted to avoid any future direct investments in coal. The Investment Committee will work with Investure to exclude from the endowment any new direct investments in coal that would be directly owned by Smith or held directly by Investure funds.
Recommendation 4: Report regularly on socially responsible investment progress
The Investment Committee of the board will work with Investure to provide regular, transparent reports to the Smith community on such metrics as fossil fuel exposure, ESG adoption and impact investments. ACIR will receive and review such reports on a quarterly basis.
For more information on these recommendations and on socially responsible investing at Smith, see the Frequently Asked Questions page.
We are proud of the advocacy and deliberative process the members of our community undertook to reach this milestone in further aligning Smith’s endowment with its mission and values. We thank the members of ACIR for their sustained work and thoughtful, deeply researched recommendations. Taken collectively, these actions send a clear signal of Smith’s strong and ongoing interest in environmentally responsible investing—and investment options—in support of its enduring mission: educating women of promise for lives of distinction and purpose.
Deborah L. Duncan ‘77
Chair, Board of Trustees