University endowment funds are a little known venture among those outside of investment circles. These funds are often given to the university under strict terms, so that the institution may invest them under specific guidelines that dictate the allocations of their assets. This often allows for long-term yields without concerns of undertaking high risk investments. Their yields are then injected back into the university, often reducing tuition or improving facilities. University endowments are granted the ability to make liquid investments with long-term prospects, giving them the perfect position to invest in and finance clean energy.
However, few institutions are investing in that industry, or any other sustainable sector for that matter. This ultimately comes down to a lack of examples to follow and forward thought. Only two university endowment management companies have become signatories to the Principles for Responsible Investment, which commits them to integrating environmental, social, and governance factors into their investment choices. This includes the Harvard Management Company and the Northwestern University Endowment Fund. However, more institutions are catching up.
The University of Virginia has recently announced that their investment fund will be committing itself to more sustainable investments. They have set guidelines and released a framework to show their efforts in making more responsible investments by evaluating the environmental and social impacts of all their upcoming investments. One of the major commitments they have made is to make the University of Virginia’s portfolio adhere with net-zero emissions by 2050. As more universities commit to responsible investments in the future, this may be the boost sustainable industries need to get ahead of their competitors.
