Theodore Casparian, Lawrenceville
I noted that Princeton University announced this week that it earned 12.7 percent on its endowment investments in its most recent fiscal year. This seems like a wonderful opportunity to address the issue of responsible investment, an area in which my organization plays a role in educating the public, endowments, and nonprofits. (Sustainable Investing 4 All, www.sustainableinvesting4all.com)
Princeton University has not signed the United Nations Principles for Responsible Investment (UNPRI), an initiative launched by Kofi Anan and the United Nations in 2006. The goal of the initiative is to “understand the implications of sustainability for investors and support signatories to incorporate these issues into their investment decision making and ownership practices. The Principles are designed to be compatible with the investment styles of large, diversified, institutional investors that operate within a traditional fiduciary framework.”
The six principles “were developed by an international group of institutional investors reflecting the increasing relevance of environmental, social and corporate governance (ESG) issues to investment practices” and that “applying these Principles may better align investors with broader objectives of society.” (Quotes courtesy of the UNPRI, www.unpri.org.) Presently 1,396 asset owners, investment managers and others representing $59 trillion have become signatories. Princeton University should become a signatory as well.
In abiding by these principles, investors take into consideration the impact of their investments, including what behaviors their investments are underwriting, and from what consequences they are profiting. Many people are already familiar with how this issue has been raised with regard to climate change and how investors, including Princeton University, can be more judicious in how they finance destructive business practices and profit from increases in asthma, forced migration, and widespread disease.
These principles also reach across a wider set of ESG issues, helping guide institutional investors to become more aware of their impact and diminish the role they play in human trafficking and forced labor (including child labor), widening of the income and wealth gaps, automotive and other industry governance scandals, mass incarceration, water scarcity, and more. These are the issues of the day and without investors providing the financial backing to those creating these problems, they would not be the crises that they are.
(As I have learned from more than 30 years of studying responsible finance, nothing ever happens without funding.)
Please bear in mind that no one is accusing institutional investors who do not abide by the UNPRI, including Princeton University, of ill will. Unfortunately, a great number of investors believe that the impact of investments should not be of concern when building a portfolio, but that the profit earned should be the only criteria. This principle was key in the work of Milton Friedman, who won a Nobel Prize for Economics in 1976. This view drove both political and economic change in the 1980s worldwide. It has since become widespread and its trajectory has continued, leading to most of the ills from which our global society suffers today. Changing this trajectory is the goal of the UNPRI and many people believe that Princeton University should adhere to the same principles of responsible investment.
I encourage all to learn more about how their own IRAs, 401(k)s, 529s, and other investments are being managed with regard to ESG issues and the UNPRI. As well, if you know someone associated with the Trustees of Princeton University, I encourage you to share with them your thoughts about Princeton signing the United Nations Principles for Responsible Investment. Please feel free to reach out to me for more information.
Theodore Casparian, Lawrenceville