May 17, 2019
Puget Sound has long demonstrated its commitment to sustainability principles through its curriculum, faculty and student research, green building standards, campus operations, and community collaborations. The university introduced an environmental studies program in 1997 and has since incorporated sustainability throughout the curriculum. In 2012, the university’s wide-ranging actions earned Puget Sound a Gold Rating in the Sustainability, Tracking, Assessment and Rating System (STARS) developed by the Association of the Advancement of Sustainability Higher Education.
The university’s Board of Trustees recognizes that climate change is unique among concerns in our society in that it is global in its reach and existential in its threat. In 2016, the Board made specific commitments that will significantly reduce fossil fuel investments in the university’s endowment over time without adverse impact on investment returns that provide annual funding for student financial aid, faculty support, and university operations. To benefit from ongoing best practices in investment management, the Board decided to review its divestment commitment in 2019 and every three years thereafter.
At its May 2019 meeting, the Board reaffirmed its commitment to reducing fossil fuel investments and expressed its aspiration to have an endowment entirely free of fossil fuel investment. The endowment’s exposure to hydrocarbons (11.5% of the pooled endowment on June 30, 2018) has declined since 2016 and will continue to decrease over time. The university also monitors its support of investments that have a positive environmental and social impact. More specifically, the Board’s commitment:
- Prohibits direct investments in publicly-traded companies that own fossil fuel reserves, as defined by the MSCI Fossil Fuel Reserves list;
- Prohibits new commitments to commingled private funds where the primary strategy is to make investments focused on hydrocarbon extraction, processing, and/or transportation;
- Provides a fossil-fuel-free endowment option for donors (established in 2017) who want their gifts invested in a portfolio free of companies that own fossil fuel reserves; and
- It is expected to reduce hydrocarbon exposure in commingled private funds by an estimated 40% by 2023, 55% by 2028, and additional amounts as illiquid long-term private investments continue to mature.
The Investment Subcommittee will continue to monitor and report annually on hydrocarbon exposure in the endowment, and the Board will review its divestment commitment again in 2022.