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Northwestern to Adopt United Nations-Supported Principles for Responsible Investing

New policy to provide greater transparency on University investments

EVANSTON, Ill. --- Northwestern University plans to sign on to the United Nations-supported Principles for Responsible Investing, joining Harvard University and the University of California-Berkeley as the only U.S. universities to do so.

The U.N.-supported Principles for Responsible Investing is an international network of investors working to put six guiding principles into practice. They broadly address the importance of environmental, social and corporate governance (ESG) issues for investors to consider when making investment choices, explained William McLean, Northwestern vice president and chief investment officer.

“Becoming a signatory to the U.N.-supported Principles provides guidance to the external investment managers with whom we work that these are principles to consider as part of their investment strategy,” McLean said. “It doesn’t tell them what investments they can or can’t own, but that they should take these things into consideration.”

In general, Northwestern does not hold individual stocks or other financial instruments itself, but works with a number of external management firms that invest the University’s funds in a variety of ways.

The U.N.-supported Principles are:

  • We will incorporate ESG issues into investment analysis and decision-making processes.
  • We will be active owners and incorporate ESG issues into our ownership policies and practices.
  • We will seek appropriate disclosure on ESG issues by the entities in which we invest.
  • We will promote acceptance and implementation of the Principles within the investment industry.
  • We will work together to enhance our effectiveness in implementing the Principles.
  • We will each report on our activities and progress towards implementing the Principles.

Within the United States, there are 24 current signatories in the Asset Owner category. These signatories are primarily public pension plans such as the California Public Employee Retirement System. The Harvard University Endowment became the first university endowment to sign up, in 2014. The University of California is also a signatory.

Becoming a signatory means that Northwestern will submit a publicly available report that documents details of the University’s organization and investment process. However, the reporting is high level and does not disclose individual investments or external investment managers.

McLean credited the Northwestern students involved in the Fossil Free NU group with raising the issue of socially responsible investing and discussing it with representatives of the Northwestern University Board of Trustees Investment Committee. In particular, he acknowledged the efforts of student leaders Scott Brown and Christina Cilento. He also noted the leadership of Investment Committee Chairman Bon French, who has met several times privately with student advocates. The Fossil Free NU group presented to the Investment Subcommittee at a meeting held in July.

“The meetings with the students have been very constructive. I understand that we may not be taking this as far as they may want in terms of divestment, but I think adoption of these principles is an important leadership step and will provide us guidance going forward,” McLean said. “I’m sure we’ll continue to meet with the students.”