Investing in Sustainable Investing Education

Part 3 of 3 on University Endowments and their Sustainable Investing Efforts

The first two blogs in this series (which can be found here and here) examined why university endowments resist student calls for fossil fuel divestment.

They suggested students may bear greater impact if they encourage adoption of broader responsible investing (RI) initiatives and create sustainable pooled fund alternatives instead.

The final post in this series examines how universities and other key stakeholders are (or aren’t) equipping students to take on this challenge.

It traces the development of university courses in responsible investing fundamentals to students’ more recent involvement in university endowments’ efforts; impact investing competitions; and US SIF’s Peter De Simone Student Scholarship program to find that, while educational efforts are growing, there’s still work to be done.

In 2012, The Huffington Post wrote a great piece on how Harvard, Stanford, Duke, and Northwestern University were becoming some of the first universities to help students bridge the gap between “doing well” and “doing good,” offering courses like “Impact Investing” and “Sustainability and Finance.”

Today, universities like Brown University, Bentley University, and UC Berkeley Haas have begun to offer courses that teach responsible investing fundamentals, as well. At the undergraduate level, Brown University offered a responsible investing class for the first time this year, with students pitching sustainable stock picks to the management of Brown’s forthcoming, new sustainable endowment fund.

While it has not always focused on ESG integration, Bentley University also runs one of the longest-standing undergraduate student investing programs around; it was seeded with a $250,000 allocation from the Board of Trustees in 1997. The Hughley Center for Financial Services (Trading Room) is made available to The Bentley Investing Group (BIG), a student group that manages a portion of Bentley’s endowment through its investments in various equities across six industries.

On its website, the group acknowledges, “BIG takes a two-prong approach to running the fund, focusing on education and capital appreciation. BIG educates the membership on investment vehicles, thereby retaining more knowledgeable members, who go on to contribute to the investment process of the fund.”

The fund’s professionalism and adaptation to market trends is notable – the fund continues to operate throughout the summer months, and connects with top local ESG investment advisors like Breckinridge Capital Advisors for guest lectures and insights on ESG integration as the field continues to develop.

At the graduate level, UC Berkeley Haas offers a strong responsible investing program with classes like The Business Case for Investing in Women; Corporate Governance: Shareholders, Stakeholders, and Corporate Control; and Managing Human Rights in Business. It also offers a seminar for the Haas Socially Responsible Investment Fund, a $1.7M+ student-led investment fund that allows students to apply and innovate what they’ve learned in the classroom to a real-world setting.

However, unlike BIG, the Haas website acknowledges one major challenge, stating, “Unlike other mainstream funds, HSRIF experiences about 50% turnover each year as students graduate.

This has implications for knowledge management and in particular, investment philosophy as the Fund welcomes a fresh crop of students and perspectives.” The most forward-thinking universities are therefore moving beyond requesting responsible investment pitches for a grade to responsible investment pitches for immediate uptake and action by university endowments and investment funds. However, the majority of schools still offer no student courses and practicums on responsible investment fundamentals at all.

Morgan Stanley and University of Pennsylvania’s Wharton School of Business – who offers courses in Risk Analysis & Environmental Management, Corporate Sustainability Strategies, Impact Investing, and Environmental Sustainability and Value Creation – both host sustainable investing competitions to get more graduate students involved, as well.

The Morgan Stanley Sustainable Investing Challenge was launched in 2014 from the initial International Impact Investing Challenge hosted by Kellogg School of Management and INSEAD Business School from 2011 to 2013. With Morgan Stanley’s corporate mentorship and financial support, the number of entries to this competition – which judges innovative “institutional-quality investment vehicles that seek positive environmental or social impact and competitive financial returns” – increased significantly. This is in part due to the scale of Morgan Stanley’s marketing capabilities, but perhaps the participation of a large financial services company also indicates that sustainable investing is no longer a trend, but an educational skill here to stay.

The MBA Impact Investing Network & Training (​MIINT) initiative, hosted by UPenn’s Wharton School and Bridges Ventures Impact+, confirms this. Popular amongst top U.S. business programs, the MIINT challenge offers teams sustainable investing training modules and up to a $50,000 investment for the winning pitch. The Morgan Stanley competition asks for comprehensive sustainable investment vehicles, while MIINT seeks out individual sustainable investments. Both are high-profile initiatives that attract new and experienced students to this field.

At a network level, the US SIF Foundation partners with Calvert Foundation and Campbell Soup Company to sponsor the Peter De Simone Scholarship, which offers 10 undergraduate and graduate students the opportunity to attend US SIF’s annual conference. The Scholarship allows students to surpass otherwise prohibitive conference fees to learn about sustainable investing practices and build a network with some of the most senior investors, CEOs, and policymakers in the country. One of the biggest barriers to unleashing wider impact within corporate responsibility and sustainable investing is helping students break into a highly-networked professional field and learn about trends from the beginning of their education, when they have little to no professional experience to offer. The US SIF Foundation pioneers a solution to this barrier by creating limited accessibility for select student attendees who it champions throughout the conference, making them a point of interest – not annoyance – to the professionals.

In the end, the focus of this series is a circular dilemma. U.S. universities are unlikely to capitulate to student calls for fossil fuel divestment until more sustainable pooled fund alternatives exist; however, an inadequate education infrastructure prevents the size and prevalence of these funds from growing. Therefore as sustainable investment trends abound, perhaps universities and investors should make the next one investing more in the responsible investment managers of the future.