Claremont, Calif. (September 21, 2017)—Pitzer College and investment firm BlackRock, Inc. announce the first ever global equity index fund that is both Environmental, Social and Governance (ESG)-focused and fossil fuel-free. The fund is designed to help endowments, foundations and other nonprofit organizations meet their Responsible Investment goals.
This August, Pitzer College became the founding investor in the MSCI ACWI ex-Fossil Fuels ESG Focus Index Fund B. This new fund uses a disciplined, quantitative approach to incorporate ESG factors in its portfolio construction while maintaining zero exposure to fossil fuel companies. The fund was developed with assistance from leading index provider MSCI and investment consulting firm Mercer.
As a major component of Pitzer’s $135 million endowment, the fund enables the College’s public equities portfolio to achieve:
- Full global diversification across developed and emerging markets
- 100 percent divestment from fossil fuel stocks
- An estimated MSCI ESG portfolio score of AA-, as compared to a BBB score for the benchmark MSCI All Country World Index (ACWI)
- An estimated 40 percent reduction in portfolio carbon intensity vs. MSCI ACWI
- Estimated annual tracking error of 0.60% relative to MSCI ACWI
- Endowment management fee savings in excess of $200,000 per year
“Many college and university boards have resisted divestment or ESG-related goals, believing they are hard to implement and may hurt endowment performance,” said Donald Gould, vice chair of the Pitzer College Board of Trustees and chair of the Board’s investment committee. “Our experience at Pitzer shows that with some creativity, even a smaller endowment can put in place innovative investment structures to achieve its Responsible Investment goals while staying true to the Board’s fiduciary obligations.”
“It can be a challenge for smaller investors to achieve ethical or ESG objectives,” noted Alex Bernhardt, who heads up Mercer’s Responsible Investment practice in the US. “Pitzer’s trailblazing makes it easier for like-minded investors to align their portfolios with their beliefs.”
“We are pleased that Pitzer College and BlackRock have chosen this global benchmark as they expand their ESG investing initiatives,” said Jana Haines, managing director and head of Americas Index at MSCI.
Pitzer College, home to the Robert Redford Conservancy for Southern California Sustainability, is a nationally recognized leader in environmental sustainability practices and academic curriculum. In 2014, Pitzer launched the Fossil Fuel Divestment-Climate Action Model, making Pitzer the first private college or university in California to divest from fossil fuels. Pitzer also reduced its carbon footprint by 25 percent in two years; established a campus task force to bolster on-campus measures to promote sustainability; and developed an ESG policy to guide endowment investment decisions.
“Pitzer College is known for responsible, ethical and innovative solutions to global environmental and social challenges,” said Pitzer College President Melvin L. Oliver. “We thank the Board of Trustees for its vision and leadership in this ground-breaking solution that empowers non-profits to align investments with their values.”
One of the first colleges in the US to launch an environmental studies program, Pitzer has promoted environmental awareness for nearly 50 years. Environmental Sustainability and Social Responsibility are Pitzer College core values. Nearly fifty percent of college buildings are LEED-certified. Drought-tolerant landscaping has helped Pitzer cut its water use in half since 2002. Pitzer was awarded a STARS Gold rating from the Advancement of Sustainability in Higher Education in 2016. The College researches, teaches and lives its commitment to sustainability.