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In honor of the 50th anniversary of Earth Day, the resource-raising entity operating for the benefit of Arizona State University sheds light on its dedication to investing money where its values lie: to build a more sustainable and resilient future.
“The university has made an institutional commitment to a more sustainable and resilient future, addressing the world’s most pressing challenges not only through its pioneering sustainability education and research but also its operations and practices,” said Jeff Mindlin, the chief investment officer at ASU Enterprise Partners. “Sustainability considerations are being embedded into the full scope of university activities, including how we invest capital in the endowment.”
ASU Enterprise Partners operates as a parent organization of five nonprofits that identify new revenue-generating opportunities for the advancement of ASU’s mission. The ASU Foundation for A New American University, one of its five subsidiaries, has recently tried to align with the university’s climate-positive goal not to have the least impact possible, but rather the greatest net positive impact through its sustainable investing efforts. This includes supporting the education of the next generation of sustainability leaders who will drive transformational change for the environment.
Sustainable investing aligns capital in a manner consistent with the mission of ASU, while advancing globally recognized sustainability goals and accomplishing financial objectives. It may include impact investing and incorporating environmental, social and governance (ESG) factors into investment analysis.
“In other words, our strategy is not predicated on where we don’t invest, but rather where we choose to allocate capital – to advance a sustainable, equitable future,” Mindlin said.
According to an article in the Chronicle of Philanthropy, “71% of U.S. consumers say corporations have a responsibility to prioritize their employees, the environment and their community as much as shareholder returns.” The ASU Foundation assumes the same obligation by investing in ways that promote the economic, social, cultural and overall health of the communities it serves.
The ASU Foundation has a fiduciary responsibility to act in the best interest of its beneficiaries and to consider the environmental, social and governance impacts of its investment decisions. The foundation created an ESG subcommittee to elevate analysis and recommendations in the portfolio with both faculty and student representation. In alignment with its commitment to invest in sustainable businesses, the foundation also created a proprietary scorecard to evaluate corporate sustainability metrics and carbon exposures.
Last year, the ASU Foundation established a $100 million Sustainable Responsible Impact Pool to proactively deploy money to dedicated sustainable strategies. This pool helps the ASU Foundation evaluate the efficacy of innovative sustainability approaches while giving donors a dedicated ESG option.
Companies whose business models position them to address global challenges and megatrends, such as the current pandemic crisis, climate change, resource scarcity, demographic shifts, advances in health care, evolving transport, educational innovation and financial inclusion, stand to benefit from long-term economic tailwinds.
“Our perpetual time horizon and consideration of ESG factors allow us to optimally take advantage of long-term investments,” Mindlin said. “We must act as stewards and invest prudently to drive superior, risk-adjusted returns, diversify the portfolio and use a sustainability lens at every point in the investment decision-making process. We believe these efforts will lead toward outperformance and a thriving, sustainable economy.”
In 2017, the ASU Foundation named BlackRock, Inc. as its outsourced chief investment officer. BlackRock is a global leader in investment management, risk management and advisory services.
According to BlackRock’s Chairman and Chief Executive Officer Larry Fink in a letter to CEOs, “climate risk is investment risk,” and “sustainable investing is the strongest foundation for client portfolios going forward.” He advocates for sustainability and climate-integrated portfolios, which will lead toward long-term profitability and a low-carbon economy.
“The ASU Foundation aligns with BlackRock’s philosophy on promoting sustainability, mitigating climate change and being more transparent in our investment decisions,” Mindlin said.
Since BlackRock is a leader and top innovator of sustainable investing, the ASU Foundation tapped into its expertise to support the development and implementation of the foundation's investment strategy for the new Sustainable Responsible Impact Pool. Initially, BlackRock will begin to deploy capital to passive, active and thematic strategies in public markets. Then, it will develop a comprehensive approach for how to take advantage of sustainable opportunities in private markets.
BlackRock is working with the ASU Foundation to analyze its public equity portfolio with ESG data. Together, they’ll develop a robust measurement framework to show the correlation between non-financial ESG factors and investment performance.
In the future, the ASU Foundation hopes to leverage BlackRock's analytic capabilities to develop ESG metrics for more targeted impact measurement in its private equity, fixed income and hedge fund portfolios.
In collaboration with the Julie Ann Wrigley School of Sustainability and W. P. Carey School of Business, the ASU Foundation launched a sustainability-geared Student Investment Management Fund in 2018 with $800,000 from the endowment.
Students learn about the spectrum of sustainable investing by designing a strategy incorporating exclusion, ESG integration and/or impact techniques while also developing strategies for shareholder engagement with a significant amount of real capital to deploy.
“My experience with the fund has been great so far,” said Emily Pham, a student pursuing a degree in business sustainability. “I had no prior experience with finance or investment banking, but I’ve learned a plethora of knowledge.”
In the course, Pham learned how to read corporate social responsibility reports, compare those reports to form 10Ks and fully understand sustainability metrics and guidelines. She credits her ability to fluently discuss sustainable investing and finance to the management fund course and its professors.
Pham attended GreenBiz20, the premier annual event for sustainable business leaders. She was able to hold successful conversations with leaders in the field, including the chief strategy officer of Lush and the chief executive officer of CalSTRS. She also had the opportunity to speak at one of the panels by Futerra about Gen Z habits in terms of sustainability and business.
“Gen Z prioritizes corporate transparency and they put their money where their values lie,” Pham said. “They’re less likely to trust corporate advertising and grew up with technology, so they know much more quickly when they see fake news or ingenuity. Therefore, if they believe a company does not align with the values they feel are important, they will not purchase from them.”
After the panel, Pham received several business cards from company leaders, including the renewable energy director of BP Oil. She hopes to leverage these connections as she gains further knowledge in a sustainability master’s degree program and eventually a career in corporate social responsibility or sustainability. She’s grateful for the course because it jump-started her knowledge of sustainability by providing valuable hands-on experience for her future endeavors.
The ASU Foundation will continue its role as a transformational catalyst with transparency and leadership in sustainable investing. These precedents will pave the way for other universities to assume sustainable investing and lead the way to a thriving and resilient future.