Socially Responsible Investing FAQ

The Investment Committee of GU’s Board of Trustees has ongoing responsibility for ensuring investments of the endowment generate returns, informed by the mission and values of the University. As such, the concept of divestment and the study of investment strategies that support Gonzaga’s values surrounding care for the planet and social justice have been ongoing for many years.

In May 2017, the Gonzaga Student Body Association passed a resolution calling for the Board of Trustees to commit to divest the endowment from the 200 most carbon-intensive companies by 2020. This resolution was in response to a Gonzaga Environmental Organization (GEO) student group request.

In August 2017, President McCulloh announced that the Board of Trustees’ Investment Committee had appointed an Environment, Social and Governance (ESG) Task Force to explore options and make recommendations to further the commitment to ESG considerations as outlined in the Investment Policy and Guidelines for the Endowment Fund:

In keeping with the Mission Statement of Gonzaga University, it is the intention of this Investment Policy to promote the basic moral values of fairness, respect for human life, defense of human rights and social justice. In the process of accomplishing a satisfactory risk-adjusted return on the invested assets of the Endowment Fund, the Committee may weigh: (1) excluding from the Fund securities of firms or managers whose policies or practices are inimical to the values the University espouses; (2) investing in securities of firms or managers that demonstrate a high level of social concern; (3) influencing the social behavior of firms invested in through the exercise of ownership rights.

It is the responsibility of the Committee to determine appropriate strategies based upon information and advice from external and internal sources, and to communicate these strategies to the appropriate parties.

On April 4, 2018, Gonzaga’s Faculty Senate voted to support the GEO student group’s resolution encouraging the Board to embrace a path to meaningful divestment from fossil fuels, though not adding itself, as a body, to the petition as a signatory. The Faculty Senate also acknowledged that investments of the Gonzaga Endowment Fund are ultimately and solely the fiduciary responsibility of the Board of Trustees. The Executive Committee of the Staff Assembly also lent its support to student efforts. 

The ESG Task Force made its recommendation to the Investment Committee earlier this fall, and at the December 7, 2018 Board of Trustees meeting, the recommendations were approved by the University’s governing body.

The ESG Task Force was comprise of a five-member committee, all of whom are alumnus of the University. Four members are also members of the Investment Committee and one member is a member of the Mission Committee.

The ESG Task Force took several steps to embrace their charge:

• Meetings with University faculty, staff, student groups and benefactors
• Soliciting input from alumni (primarily through an article in Gonzaga Magazine soliciting input in Dec. 2017)
• Surveys of other Catholic and Jesuit institutions
• Meetings with asset managers and sustainability investment professionals
• A review of articles, studies, practices, policies and guidelines in the area of socially responsible and sustainable investing, including Laudato Si’, the papal encyclical on care for our common home
• Commissioning of an analysis by MSCI, a nationally recognized statistical group, to measure the carbon metrics and fossil fuel reserves of the publicly traded equity portion of Gonzaga’s Endowment

The ESG Task Force and Investment Committee recommended a socially responsible investment strategy that takes a holistic approach for pursuing investments and actions that will have the greatest impact for the planet, society, and the long-term benefit of our students. This strategy includes five primary actions:

1. Develop specific positive impact investment objectives and allocate a portion of the endowment toward such investments. The Investment Committee will target approximately $10 million towards new investments in funds or companies that reduce carbon emissions and greenhouse gases, promote social responsibility, and seek solutions for climate change. 
2. Measure and evaluate current and prospective fund investments, as well as the underlying companies within funds, against socially responsible investing criteria. All equity funds, as well as the underlying company holdings within each equity fund, will be evaluated using new socially responsible investing criteria designed to quantitatively and qualitatively measure environmental and social risks and opportunities. Such measurement will compliment other relevant information used by the Investment Committee to make investment decisions. Those equity managers who measure poorly using this new criteria are less likely to be a component of the Gonzaga endowment investment portfolio moving forward.
3. Communicate to investment managers the University’s view on the importance of socially responsible investing. On an annual basis, formally convey to all of the investment managers within Gonzaga’s endowment investment portfolio our mission and the importance we place, as a University, on having our values reflected in our investments. This effort builds awareness among our investment managers and promotes Gonzaga’s environmental and social concerns.
4. Create transparency in how the Investment Committee is fulfilling its commitment to socially responsible investing. Deliver an annual report of the actions taken by the Investment Committee in fulfilling socially responsible investing responsibilities. Provide opportunities for members of the Gonzaga community to review and offer feedback, observations and suggestions.
5. Revise the Endowment Investment Policy where needed to add clarity. Make necessary revisions to the Endowment Investment Policy to incorporate these recommendations.

The concept of divesting from carbon-intensive companies was taken very seriously by University leadership, the ESG Task Force, the Investment Committee and ultimately the Board of Trustees. At the same time, these groups carefully considered the complexity of this issue, weighing the impacts of specific actions, such as divestment, upon the University, the environment and society.  

This resulted in the Task Force making recommendations that represent a holistic investment approach for creating positive, measurable impact. The Task Force recommended – and the Board of Trustees agreed – that an intentional commitment to invest in companies that are implementing ways to reduce carbon emissions and have sustainable business practices is a more impactful and financially responsible strategy than divestment. 

The Task Force ultimately concluded that to remain actively invested in companies – some of which are on the top 200 list – that are among the leaders in researching solutions to carbon emission, alternative energy sources, and improved governance was a more constructive action than a blanket approach to divestment. 

Approximately 4.4% of the public equity portion of the endowment owns some form of fossil fuels reserves. Such investments represent individual company holdings within an investment fund held by the University. To divest of these holdings, the University would need to sell each of the funds and select a new fund that specifically excludes investment in such holdings.

The University’s endowment investment consultant prepared an analysis to estimate the impact of divestment of the top 200 most carbon-intensive companies. Cost of divestment included additional fees, transaction costs, as well as an estimate of differential investment returns using various funds that do not invest in certain carbon intensive companies. The various costs of divestment were estimated at $1.7 million annually.

The majority of long-term investments of the University are held in a pooled investment portfolio. As of June 30, 2018, the pooled investment portfolio was $228.1M.

Gonzaga has a strong record of sustainability and care for our planet. The way in which we invest our endowment funds is an important part of many initiatives the University has implemented. Most notably, the Climate Action Plan (CAP), first established in 2013, embodies the University’s response to climate change and its efforts to advance ecological stewardship.  The CAP outlines goals to deepen sustainability across the academic curriculum, our co-curricular programs, and broader University operations. Joining other American colleges and universities, Gonzaga became a signatory to the American College and University Presidents Climate Commitment (ACUPCC) targeting a goal of net zero greenhouse gas emissions by 2050. In our Strategic Plan, the University has a goal to reduce its carbon footprint by 20% by 2020; a goal that has already been met and exceeded. 

The work of the Climate Action Plan has informed dozens of positive changes on our campus, including the following: 

• Interior and exterior LED lighting
• The intentional decision to install a geothermal heating and cooling system at the Hemmingson Center, and to meet LEED Gold certification for the project
• All new campus construction is to meet LEED Silver certifications or better
• Complimentary Spokane Transit bus passes for faculty, staff and students
• Partnering to bring Lime bikes and scooters to Spokane
• The environmentally friendly design of the new Sharp Avenue, a primary arterial to Gonzaga’s campus
• Creation of a student-led annual “Green Fund” used to support sustainability projects around campus
• Purchase of renewable energy certificates equivalent to 44 percent of its energy coming through Avista Utilities’ Buck-a-Block program
• Beginning in December 2018, Gonzaga’s total energy usage from renewable sources will be just shy of 50% due to an additional 5% of its energy coming through Avista Utilities’ Solar Select Program sourced from a new solar installation in Lind, Washington – now the largest solar installation in the state
• Computerized irrigation controls that allow staff to remotely monitor and control water output based on weather
• Participation in Spokane’s “Clean Green” program — composting more than 35 tons of tree needles and leaves each year
• Car sharing options and electric vehicle charging stations

Please email gonzagasi@gonzaga.edu with additional questions. All media inquiries should be directed to Mary Joan Hahn, Senior Director of Community and Public Relations at 509-313-6095. This FAQ list will be updated in response to questions received.