Mission-Related Investing Gains Traction | Chief Investment Officer

Mission-related investing (MRI) is gaining strong momentum among non-profit institutional investors, with 31% making investments aligned with environment and climate change, healthcare, housing, job creation, and education, according to a survey by Cambridge Associates, a global investment firm. None of the investors surveyed expect to decrease their allocations.

It’s no secret that public demand has been high for colleges and universities to divest from fossil-fuel related investments, and the survey found climate risk a top consideration for 41% of colleges and universities and 30% of foundations.

Most of their investment strategies involve negative screens, but investors anticipate proactively seeking ESG and environment/climate change opportunities in the future. Respondents said their biggest challenges are lack of adequate mission-related investment options and their own resource constraints.

“The good news for mission-related investors is that we’re seeing a proliferation of ESG and impact investing strategies coming to market, so this product supply problem is becoming less of a barrier to entry over time,” Jessica Matthews, managing director at Cambridge Associates and head of the firm’s Mission-Related Investing Practice, said. The firm tracks 1,000 MRI funds.

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The survey, fielded in 2016, included 159 non-profit institutional investors of foundations, colleges and universities, religious institutions and pensions from the United States, Italy, Japan, New Zealand, Switzerland and the UK.

Of the respondents, 44% have increased their mission-related allocations recently and 62% expect to grow it within five years.

It’s still early for investors to have solid performance data to review, but in 2015, Cambridge worked with the Global Impact Investing Network to study the financial performance outcomes for private equity and venture capital funds with an impact lens. “That first report, issued in the summer of 2015, did demonstrate that in many cases, impact investing funds had performed in line with comparable benchmarks that we pulled from our own database,” Matthews told CIO.

When it comes to measuring social impact from investments, firms have different approaches. “Our view is that there is no one-size-fits-all; we’re not going to come up with a score,” said Matthews, who considers measuring impact part of due diligence. It’s “understanding the impact the manager intends to have,” she said.

Four women running major university endowments have left their jobs in the past few months.

The departures include: Sally Staley, CIO for Case Western Reserve University, who retired; Kimberly G. Walker, CIO at Washington University, who will continue to do some consulting to the university, according to an official release; Pamela Peedin, CIO at Dartmouth College, who announced last November that she will leave this June for personal reasons; and Adele Gorrilla, CIO for Denison University, who left to join an unnamed family fund.

This handful of departures, recently reported by Bloomberg, wouldn’t be so noticeable if there were more women in this aspect of the business, but women account for only about 15 percent of top managers for endowments, according to related research.)

These departures aren’t about being female, says Deb Brown, managing director, asset and wealth management recruiting practice at Russell Reynolds Associates. She believes it is more likely that four women are leaving because traditionally tenure in these roles is short. “Forget the gender issue. You can count the number of men who have been in their jobs for years on a hand and a half.

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“I’m just not convinced that this is a trend line. I think the CIO role is terrific for women. It is the kind of role that can be incredibly satisfying with a reasonable work life balance,” she added.

Yet when it comes to the career ladder, women in finance generally make 65 cents for every dollar their male coworkers earn, says Catherine Hill, vice president for research for the American Association of University Women, AAUW.

It is one of the largest pay gaps in any industry, she says, and especially troubling considering that pay in accounting is generally equal between the sexes. “It isn’t about women being able to do the work, it is something about leadership itself – it is associated with masculinity.”

Hill also believes that the current political environment is making things even tougher on women. “We’ve had a change in the political climate and that affects the workplace climate. We’re seeing a willingness to express bias openly, and women are leaving because of the climate that they experience as a result,” she says.

By Jennie L. Phipps