By DONOVAN HARRELL
Chancellor Patrick Gallagher announced that he and other Pitt administrators will explore alternative investment strategies for the University’s more than $4 billion endowment following the release of a report from the Socially Responsible Investment Committee.
In a letter to the Pitt community, sent on Aug. 27, Gallagher commended the committee’s report, released in July, for providing “a useful foundation for the University to develop an approach that incorporates and expands the use of SRI principles into its investment activities.”
The committee, which Gallagher formed in January 2018, compiled community input, data on SRI funds and more for the report. Among its many findings, the committee found that it was in the University’s best interest to keep several non-financial issues in mind when selecting investments in addition to other issues concerning university finances.
Gallagher said in his letter that the committee found three main factors for university administrators to consider:
1. The importance of an identified social issue to the University community.
2. If and how an SRI decision would affect an identified social issue.
3. If and how an SRI decision would impact the institution’s long-term financial health.
Some of the specific issues frequently addressed at town halls include climate change, human rights and “contributions to societal ills,” such as weapons manufacturing and fossil fuels, according to the report.
“SRI is a relatively new and evolving approach to managing financial assets that considers the nature of an activity supported by an investment — and not just its potential financial return,” Gallagher wrote. “Our goal in exploring this approach was to determine if we could better align activities in our endowment’s investment portfolio with the values that are important to our university community.”
In response to the report, Gallagher said he has encouraged Senior Vice Chancellor and Chief Financial Officer Hari Sastry to explore some new potential investment strategies.
These strategies include:
Creating environmental, social and governance criteria to screen potential investments and presenting these criteria to the Board of Trustees Investment Committee for review.
Creating a “clear approach” for these screenings and the presentation so that the board can weigh the pros and cons of each investment decision.
Expanding Pitt’s long-term sustainability plan, which focuses on creating sustainability improvements in energy and transportation.
Gallagher added that the overall goal for these new strategies was to better align Pitt’s investment portfolio to its core values.
The report also found that 13 of the 15 largest university endowments in the U.S. mention SRI in their endowment policies, Gallagher said. However, there is a risk that SRI strategies could lower the University’s long-term financial returns.
“This risk is significant because the University relies heavily on its endowment — its largest financial asset — to permanently support and sustain our mission by funding student scholarships, faculty positions, research activities and more,” Gallagher wrote. “It is for this reason that Pitt’s Board of Trustees is obligated to oversee and safeguard this asset for the benefit of current and future generations of students and faculty members.”
Gallagher concluded that there are still more conversations to come about how to properly implement these new strategies.
Donovan Harrell is a writer for the University Times. Reach him at email@example.com or 412-383-9905.