Spring 2015

HUMBOLDT STATE UNIVERSITY has moved aggressively to green up its endowment, taking a leadership role in higher education by further divesting from fossil fuels and adopting a broad definition of socially concerning sectors to be avoided. Significantly, the effort involves targeting the institutional mutual funds in which the endowment is invested.

With the changes, HSU joins a small group of institutions nationwide that are looking beyond their direct investments to focus on the more difficult challenge of institutional mutual funds. They include, according to tracking by the group 350.org, Pitzer College in Southern California, and Sterling College in Vermont.

The effort is in part a response to a national, student-led push for universities to divest their endowments from fossil fuels. It is also a natural fit with the University’s long-standing commitment to sustainability, and has been advocated for by students locally.

“We’re a small school with a relatively small endowment, but we have a long history of leading in social responsibility, in particular, advancing change in environmental stewardship,” said Heather Bernikoff-Raboy, an HSU alumna who recently became Chair of the University’s Advancement Foundation, which oversees the endowment. “We heard the students, we agree with them, and we are proud to have worked with them to get to this point.”

Humboldt State is already at the forefront of socially responsible investing. Unlike at many universities, its Foundation has never included direct investments in the concerning sectors.

“Someday we Want to Tell our Grandchildren and our Great-grandchildren That we did What Could. when we Were Confronted by the Reality of Climate Change, we Tried to be Part of the Solution.” -Duncan Robins

The Board previously adopted the “Humboldt Investment Pledge” in the spring, which significantly expanded the definition of socially concerning investments and included commitments to more strongly consider the social and environmental impact of how the endowment is invested and to actively seek positive investments to offset holdings in the concerning sectors. Following up on that, the Board took a number of steps at its October meeting, including:

  • Directing that 10 percent of its overall portfolio, including institutional mutual funds, be shifted to “green funds”—those with no holdings in fossil fuels or other concerning sectors. The goal is to complete this over the next year.
  • Reinforcing a long-standing policy of having no direct investments in fossil fuels or other concerning sectors.
  • Creating a new investment option that will be invested entirely free of fossil fuels or other concerning sectors and developing ways to invest in campus-based sustainability projects.
  • Directing its Development Committee to explore creating a “Green Challenge” offering donor options including an unrestricted permanent endowment in which every $500,000 donated would allow shifting another 10 percent of the investment portfolio to green funds.

Many students and alumni who had advocated for the changes, and had worked for months with the Board’s Finance Committee, were on hand for the full Board’s long discussion. They continued to urge the Foundation to do more, particularly in relation to fossil fuel divestment. But they also thanked the Board for taking strong steps forward.

Annette Penny is an HSU student who has pushed for fossil fuel divestment and also now serves as a student representative on the Advancement Foundation Board. She recently submitted a blog post about the campus effort, which was published by 350.org. In it, she recounts some of the reasons for her advocacy—including sending a clear message about “haphazardly extracting finite resources from the Earth in unnecessarily destructive ways.”

“It’s true that divesting will not topple the industry,” Penny writes. “Heck, it probably won’t be any more aggravating than a buzzing bee. That’s the thing about divesting though, is that it can be done nonchalantly in order to reduce risk. Or it can be done in a loud and proud manner in a way that isn’t a single buzzing bee, but a swarm that stings and flaunts the message to the industry that ‘we do not support your destructive nature nor will we tolerate it any longer!’” The HSU Advancement Foundation has never held direct investments in fossil fuels and other concerning sectors.

Its goal now includes expanding to indirect investments inside its institutional mutual funds. It’s a much more complicated effort, and one that has proven to be a challenge for universities and other organizations looking to target their investments in a more responsible way. That’s because institutional mutual funds provide a low-cost way to reduce risk, particularly for smaller endowments, but they also include holdings in a wide variety of companies that investors don’t directly choose.

The ambitious goals include a broad definition of “concerning sectors” and “fossil fuels.” The sectors include those traditionally seen as socially concerning—defense, alcohol, casinos, and tobacco—while the fossil fuel sector definition is much broader than typical, including not only companies involved in extraction, but those that sell energy, provide equipment, and support the industry through various services.

Identifying investments that work within the standards required months of new research and analysis by the Foundation’s financial advisor.

“It’s true that we can’t fix things overnight. Right now, today, we all pay some of these companies that are using fossil fuels to heat our homes, and most of us depend on fossil fuels for transportation,” said Duncan Robins, a member of the Board’s Finance Committee who took the lead in developing the new policy and approaches.

“But we can imagine a future when that’s not true, and taking action now is part of making that future a reality,” Robins said. “Someday we want to tell our grandchildren and our great-grandchildren that we did what we could. When we were confronted by the reality of climate change, we tried to be part of the solution.”

The decisions at the October meeting follow the Board’s April adoption of a new “Social and Environmentally Responsible Offset and Mitigation Policy.” It’s known as the “Humboldt Investment Pledge” in recognition of the Graduation Pledge of Social and Environmental Responsibility, which was created by HSU students almost three decades ago and is now used at nearly 100 universities worldwide.