Yale’s Endowment Goes Green

Posted on by Paul Ellis

In August, Yale University’s Chief Investment Officer sent a letter asking every asset manager Yale engages to “. . . assess the greenhouse gas footprint of prospective investments, the direct costs of the consequences of climate change on expected returns, and the costs of policies aimed at reducing greenhouse gas emissions on expected returns.”*

This is a $21 billion fund and has had one of the most successful endowment performance records for the past 10 years. As advisors we know that institutional investors lead retail investors by 3-5 years in investment strategy. And within the institutional world Yale is leading the way. It’s time for advisors to pay attention!

Major fossil fuel and power industry companies are also making their positions on climate change clear. In August Shell Oil said that “CO2 emissions must be reduced to avoid serious climate change.” NRG said that “Global warming is one of the most significant challenges facing humankind.” And Exxon Mobil, the biggest of the oil majors, declared that “Rising greenhouse gas emissions (GHG) pose significant risks to society and ecosystems.”**

How can you use this information to increase AUM, grow your practice and strengthen relationships with your clients?

Missed Opportunities

First, talk to your clients! I’ve been making the point for years that most clients are interested in learning about SRI. A recent Calvert study reinforces this point yet again. The study found 82% of advisors surveyed expect their clients to raise the topic of sustainable investing, but 72% of investors surveyed expect their advisors to bring it up.***

Don’t lose this opportunity to grow your practice because you’re not comfortable initiating a conversation about SRI. My advice is to call on the expertise of the leading Sustainable and Responsible Investment (SRI) companies. They have staff dedicated to helping advisors understand and choose appropriate SRI strategies as well as market them. Companies like Calvert, Parnassus, Pax World and Trillium have been considering the impact of climate change and GHG emissions in their stock and bond selection process for more than ten years and regularly conduct environmental impact analyses on publicly traded companies.

And SRI is a great strategy for new client acquisition. Two advisors I work with recently opened accounts for new clients worth $500,000 each because they initiated the SRI conversation with prospects. These advisors have developed strong relationships with SRI companies and had the help they needed to close the sale.

If you’re one of the 82% of advisors waiting for clients to bring up SRI, it’s time to switch gears and begin the conversation.


* https://www.responsible-investor.com/home/article/ri_swenson/

** utsandiego.com/news/2014/aug/21/fossil-fuel-majors-climate-action/ …

***“Calvert Brand Health Tracking W1: Final Report,” Northstar Research Partners, November 2013.