Prior SRI Work and Recommendations

Final Recommendations from the SRI Task Force, May 26, 2016

Climate Change is one of the most pressing issues of our time—and even more so for our students’ generation.

One only need examine the university’s successful sustainability initiatives to date to see why its students, faculty and staff rightfully take pride in the university for being a leader in environmental justice and sustainability. SU’s leadership is a direct result of the deep commitment and collaborative work by all in our community, most notably our students. While there is more work to do, Task Force members recognize and applaud the leadership of students in building a campus-wide movement that has led to positive change.

From the university’s Climate Action Plan to the Center for Environmental Justice and Sustainability, SU is acting to build a more sustainable world. We were the first educational institution in the state to sign the Washington Business Climate Declaration. The declaration, which President Stephen V. Sundborg, S.J., signed, states: “There is a clear and present need for action on climate change to protect our region’s natural assets, its vibrant communities and its growing economy.” In addition, there has been significant progress made in recent years to transform the campus into a sustainable and carbon neutral one. The SRI Task Force encourages the university to continue these efforts and consider new sustainability initiatives aimed at increasing energy efficiencies and reducing the university’s carbon footprint.

As a group, members of the Task Force are uniformly committed to continuing this forward momentum. We are deeply cognizant of the responsibility with which we were entrusted and the task with which we were charged.

In making its recommendations, the SRI Task Force is especially mindful of Pope Francis’ encyclical Laudato Si’ and the university’s responsibility as a Jesuit Catholic institution to be a leader in advancing sustainability and the promotion of justice. Members wrestled with and considered a broad spectrum of issues and recommendations, ultimately deciding to move forward on those where consensus could be reached. A variety of viewpoints were expressed in terms of the symbolic and actual impact divestment might have in driving social change as well as the practical impact it would have on the endowment’s investments and its investment strategy. Additionally, the Task Force intently explored and considered the challenges and difficulties of divesting from fossil fuel securities, albeit indirect investments in the SU portfolio. Doing so would place limitations on the Investment Committee’s ability to implement strategies that generate efficient returns on contributions entrusted to SU from generous donors.

The Task Force sincerely hopes that it has set a process in place that will continue to benefit the university and its Jesuit Catholic educational mission for years to come. It is a process designed to serve as a new convergence point for the university community to come together to find the best way forward for the greater good. 

The SRI Task Force:

President Sundborg announced the creation of the Socially Responsible Investments (SRI) Task Force in March 2015 as a way to explore options in which Seattle University could further its commitment to social responsibility in making investments which are consistent with its Investment Policy Statement (IPS). The IPS states:

Consistent with the university’s Jesuit Catholic values, the [Investment] Committee will consider the university’s commitment to ethics and social responsibility in making investment decisions. While the committee remains committed to its fiduciary duty to the university’s long-term financial growth and sustainability, it also recognizes the value of non-traditional investment opportunities in providing a reasonable return as well as furthering the university’s mission and values.

The President’s announcement stated “the SRI Task Force was established in large part as a result of the dialogue the administration engaged in with Sustainable Student Action (SSA) on divestment from fossil fuels.” He went on to say that he felt it was important to find ways to take concrete steps in areas where there is consensus and to continue the progress Seattle University has already made through the Climate Action Plan and other initiatives on advancing sustainability in the university’s operations and academic programming.

The Charter for the Task Force is attached in Exhibit 1. It states that “[t]he Task Force will consider issues of social responsibility in the investment policies and practices of Seattle University. It is charged with making recommendations to the Investment Committee on socially responsible investment issues related to the investments in the university’s endowment.” 

The SRI Task Force is part of the Board of Trustee’s Investment Committee and was set up for a term of one year. It consists of 11 members representing the Board of Trustees, alumni, students, faculty and staff. Task Force members include:

  • Bob Blais, Chair, Board of Trustees and Investment Committee member
  • Cathy Cao, Faculty representative–Assistant Professor, Finance
  • Nathan Colaner, Faculty representative–Instructor, Philosophy
  • Yichen Fan, Student representative–Albers School of Business and Economics/Redhawk Fund analyst
  • Anne Farrell, Investment Committee member
  • Joe Gaffney, Board of Trustees and Investment Committee member
  • Zebedee McCall, Graduate Student representative–Albers School of Business and Economics/MBA
  • Scott McClellan, Administration–Vice President, Marketing Communications
  • Jill Naas-Blackburn, ’95, Alumni representative–Program Management, Wells Fargo
  • Andrew O’Boyle, Administration–Associate Vice President, Finance and Investments
  • Brian Yadao, ’09, Alumni representative–Portfolio Analyst, Russell Investments

 The members of the Task Force were appointed as follows:

  • The Investment Committee Chair appointed the SRI Task Force Chair;
  • Seattle University Student Government (SGSU) and the Graduate Student Council (GSC) appointed the student representatives;
  • Academic Assembly appointed the faculty representatives; and
  • Father Sundborg appointed administrative staff and alumni representatives.  

The Task Force met seven times over a 12-month period. The work that was done at each of these meetings is briefly summarized below.

Meetings 1 and 2: Defined SRI Task Force goals and objectives, reviewed the endowment’s current asset allocation and investments and discussed the differences between direct investments, separately managed accounts and pooled and index funds. Cambridge Associates also reported on the endowment’s exposure to fossil fuels and what they are seeing on the SRI front with other clients and within the investment industry.

Meeting 3: Brainstormed and developed a comprehensive list of recommendation options to be vetted. All ideas outlined, including complete divestiture from fossil fuels, were kept on the table and nothing ruled out. 

Meeting 4: Performed a deep dive on the comprehensive list of options, from which a short list was developed. The items were separated between those in which the group appeared to have an emerging consensus and those where consensus did not exist. 

Meeting 5: Planned for the open fora with the campus community.

Meeting 6: Conducted three fora. The first one was at lunchtime, which included the six faculty authors of a letter calling for divestment that was submitted to the Administration and Board of Trustees and six leaders of Sustainable Student Action. The other two were open sessions—one in the afternoon and the other in the evening, which were open to all faculty, students and staff of the university.

Meeting 7: Finalized the SRI Task Force’s recommendations to the Investment Committee. 

Recommendations:

After considerable inquiry and discernment, the Task Force, by consensus, respectfully recommends the Investment Committee adopt each of the following recommendations no later than January 2017.

  1. Establish a permanent subcommittee of the Investment Committee to hear, review and make recommendations to the Investment Committee on campus community concerns relating to SRI, environmental, social and governance (ESG) and ethical matters pertaining to the endowment. While fossil fuel divestment is receiving considerable attention today, other issues will emerge that warrant thoughtful discernment and in-depth analysis by a representative committee of campus stakeholders. Furthermore, the evolving nature of fossil fuel divestment and a corresponding growth in efficient and reliable low- and no-carbon investment options calls for continued review and analysis of how the university might responsibly and prudently reduce—and potentially eliminate—its indirect endowment investments in fossil fuels over the next decade.
  2. Adopt a policy that mandates the Investment Committee explicitly consider SRI, ESG and ethical factors when evaluating new investment opportunities and existing investments for the portfolio and prioritize accordingly those with strong convictions to these important matters. The university’s investment consultant will present relevant SRI/ESG information on all managers when making recommendations to the Investment Committee. The Task Force believes that this policy is a significant and positive step that should be implemented immediately.

The Task Force further recommends that this subcommittee be chaired by a member of the Investment Committee who will serve as the liaison between the campus community and the Investment Committee. There should be representatives on the committee from all campus constituencies - concerned faculty, staff and students—and no more than half of whom should be members with a finance/investment background or focus. A charter for this subcommittee should be developed and approved by the Investment Committee.  

  1. Adopt a policy that commits to no direct investments in fossil fuel companies listed in the “Carbon Tracker 200” or the “Filthy 15” (lists of these companies are attached in Exhibit 2).
  2. Prepare and send a letter to existing managers that notifies them of the university’s values in regards to SRI/ESG and ethical investing and request that consideration of such be given to these factors as part of their investment decision process.

 It is important to note that the current portfolio does not utilize direct investments in its strategy; however, the Task Force believes that making this commitment will ensure no direct investments in fossil fuel companies are made in the future. This change will impact the investment selections made by the Redhawk Fund, the student-run investment group on campus, which is currently holding stocks in three publicly traded companies on the aforementioned lists. They would be asked to divest from those securities if this recommendation is adopted. 

  1. Appropriately amend the endowment’s IPS to reflect SRI Task Force recommendations formally adopted by the Investment Committee.
  2. The university retirement plan currently offers four options for faculty and staff to invest their retirement portfolio in socially responsible funds. Currently, less than 5 percent of the total assets in the retirement plan are invested in these four funds. The Task Force suggests that the university consider additional ways to make faculty and staff aware of all investment options, including the four funds noted above, through appropriate channels. 
  3. In the open fora discussions, both students and faculty put forth the suggestion that the university might collaborate with other Jesuit Catholic universities to increase the options available to it by expanding the overall scale. This recommendation should be explored further by the subcommittee (recommendation #1).

Socially Responsible Investments Task Force Exhibits 1 and 2 (pdf)