They may be living on pizza and shoestring budgets, but a growing number of college students are trying to steer their universities' billion-dollar endowments and Corporate America towards social responsibility. Students at 39 U.S. schools have established Committees on Investor Responsibility and Yale University undergraduates are managing a socially responsible endowment fund.
A number of factors have helped pique and tweak collegians' interest in socially responsible investing since their initial efforts on campuses in the 1970s.
The explosion in endowment assets--universities and colleges nationwide now control over $400 billion--has given schools a louder voice in the investment community. They've amassed these assets by embracing a new model of endowment investing over the past two decades that's introduced them to riskier, less liquid assets including hedge funds and private equity.
Students also have more access to information thanks to technology and the Responsible Endowments Coalition (REC). The organization (www.endowmentethics.org) was founded in 2004 by student activists from a handful of Ivy League and other top institutions who were interested in using their schools' endowments to positively change corporations. REC, which empowers students to defend human rights and the environment while making corporations and universities responsible to global stakeholders, currently works with about 100 schools.
Students started to look for more ways to have influence when campus activism around the Iraq war wasn't ultimately successful. The Sudan divestment movement has also brought particular interest in investments, says Dan Apfel, REC's executive director. The current economic crisis has encouraged interest, too.
Apfel notes that Committees on Investor Responsibility (CIR) are currently involved in proxy voting and shareholder advocacy. Down the road, "I truly believe that students will push their administrations to make their endowments much more holistically responsible and sustainable, actually influencing investment decisions," he says.
"(Seattle University's) administration has been incredibly supportive and has welcomed our recommendations and acted promptly upon their implementation," says undergraduate Maura Rendes, who helped found the school's Committee on Responsible Investment (CRI) and has led it for the past couple of years.
The CRI has included a sustainability clause in its university investment policy, started a revolving loan fund for campus sustainability projects, and led a community investment campaign resulting in investments in a Seattle community development program and a micro-enterprise firm active in Latin America, says Rendes, a public affairs and Spanish major with a minor in environmental studies.
"Additionally, we were active in a campaign asking Bank of America to discontinue financing of mountain top removal coal mining (in which they have since changed their policy), a letter writing campaign supporting Loyola University Chicago in their conversation with JP Morgan Chase about financing MTR coal mining, as well as Seattle University's letter to Massey Energy expressing our disapproval with their actions and our consideration of divestment given their non-compliance with values important to our university," she says.
"The university setting is a fantastic place to foster and spread energy about social responsibility. As college students, we have the rare opportunity to be able to claim collective ownership of the millions of investment dollars which fuel our economy-both for better and for worse. With proactive and informed oversight of these dollars, we can make sure that our influence on society and the environment is just as it should be from a university-'for better,'" says Rendes. "The movement is both exciting and empowering to be part of."
Yale undergrad Aaron Podolny has worked with his school's Dwight Hall SRI Fund for two years and is currently its chair. The fund-a small portion of the endowment of Dwight Hall at Yale, a non-profit that serves over 70 service and advocacy organizations at the university-made its first investments in October 2009 and was fully invested as of this past June. Its $40,000 market-driven portfolio invests through SRI mutual funds, exchange-traded funds and real estate investment trusts. It also has a $10,000 mission-driven portfolio that invests in local community development banks and is considering an international microfinance portfolio.
"The goals for the fund are educational, financial and social. It is intended both to teach students about SRI in the context of managing an endowment portfolio and build knowledge and excitement about SRI on campus," says Podolny, a philosophy major. It also supports the work of Dwight Hall at Yale.
Podolny says the fund has catalyzed discussions about the relationship between business, society and the environment. This year it has received interest from students at three universities about starting similar funds.
"I'm wildly optimistic; these young people give me all kinds of hope," says Laura Berry, executive director of the Interfaith Center on Corporate Responsibility (ICCR) and a member of the Dwight Hall SRI Fund's board of advisors. "They ask good questions ... and they see explicit relationships that are fairly subtle if you're not paying attention. I know a lot of people my age active in politics and business who don't see the connection between civic action, capital markets, justice and climate change."
Trillium Asset Management president and portfolio manager Cheryl Smith, also on the board of advisors, calls the Dwight Hall SRI Fund "a great combination of action and practice." Her best advice to its student leaders: analyze what goes right and what is troubling with each decision. "Nothing in the investment world is clear cut, and the experience they gain in making these decisions will help them gain perspective and the ability to make nuanced decisions," she says.
Apfel adds, "There is a huge amount of potential to change the way finance works by changing universities-leaders in both investing and in the education of the next generation of leaders-who are working for this change now ... These students really are going to be the investors and professionals working on corporate responsibility issues in the future." Financial advisors can help, he says, by offering them internships and jobs-and by contacting their own alma maters to encourage them to establish responsible investment and community investment policies.