Impact Investing and the OEC Endowment Fund
For over 45 years, Oregon Environmental Council (OEC) has been leading the charge for impactful, lasting solutions to Oregon’s environmental challenges. Now OEC’s endowment investment portfolio will reflect OEC’s commitment to finding innovative and enduring environmental solutions.
Oregon Environmental Council has moved our endowment fund to a set of investments that not only divests from oil, coal, gas and other environmentally damaging industries, including companies like Monsanto and Walmart, but also actively invests in companies that take environmental and social responsibility seriously. We put together a custom-built investment portfolio that reflects our commitment to clean water, a healthy climate and an unpolluted landscape, as well as our commitment to a solid financial performance that will allow us to serve Oregonians for generations to come.
Using a one-of-a-kind custom scoring system that rates individual businesses and existing mutual funds on their environmental and social commitment, OEC invests in corporations that excel at environmental responsibility and performance, carbon emissions reporting, environmental transparency, workplace safety, human rights and responsible corporate governance.
Grist.com, a nationally recognized hub for environmental journalism, covered this divest-invest strategy in a feature article that delves into OEC’s work to divest from fossil fuels and invest in business practices that reflect OEC’s mission and values: “The OEC story proves that, while it may take a little work, it’s possible to develop a portfolio that matches your morals and makes money, too.”
This impactful portfolio is made up of four distinct investment groups, in order to reflect both Oregon Environmental Council’s mission – advancing solutions to our environmental challenges – as well as our duty to ensure our investment funds provide market based returns and will help support OEC for generations. These four investments are:
1. OEC’s customized large cap core Russell 3,000 Index
This highly diversified portfolio represents a unique collaboration between Segue Point founder Mark Bateman, John Wrenn of UBS Financial Services and Oregon Environmental Council. Starting with a deep conversation about OEC’s core values, ENSOGO Analytics developed a custom scoring mechanism that evaluates potential investments on their environmental policies and impacts, their corporate governance and transparency and their social responsibility.
John Wrenn then created a custom portfolio culled only from the highest scoring stocks. In order to mitigate risk and achieve predictable returns, the fund was optimized to match the Russell 3,000, an index that measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market, with a tracking error of less than one percent.
This portfolio represents 50% of Oregon Environmental Council’s endowment.
2. Scored Mutual Funds
In order to diversify OEC’s investment portfolio, and to hedge against any unforeseen risks inherent in a proprietary investment package, OEC then worked with ENSOGO Analytics and John Wrenn to create a first-of-its-kind system for scoring publicly available mutual funds based on their underlying investments. OEC screened both funds that were billed as “socially responsible” and general market funds using the same unique, proprietary scoring mechanism used to create the customized large cap portfolio. Four funds were chosen for their combination of long-term financial returns and the underlying environmental, social and governance performance of their holdings.
Screened funds represent 16% of Oregon Environmental Council’s endowment.
3. Activist Funds: Trillium Investments
By investing in Trillium Asset Management’s All Cap Core, OEC funds have the potential to change corporate practices from the inside out. Trillium uses shareholder advocacy efforts and direct C-suite engagement to promote shareholder proposals, such as asking major natural gas producers to track and disclose their methane emissions and large corporations like Yahoo! and AmGen to disclose political contributions. With a 45-year history of advocacy, Oregon Environmental Council knows that sometimes you have to get to the source of the problem. That’s why OEC decided to invest in shareholder advocacy, working from the inside of corporate ownership to make real and effective change.
Trillium Investments represent 20% of OEC’s endowment.
4. Worldwide Impact: UBS Global Sustainable Equity
While Oregon Environmental Council seeks solutions for Oregon, our work has been replicated nation- and world-wide. Similarly, our endowment reaches across the globe through UBS’s Global Sustainable Equities. This portfolio has a long track record of meeting or beating the equity market performance of developed markets outside of the U.S. & Canada, while investing in sustainable companies addressing challenges like climate change with winning business models – looking at the whole picture and not just financial statements.
UBS Global Sustainable Equity represents 14% of the endowment fund.