SF State Foundation strengthens commitment to racial and climate justice with enhanced investment goals

Author: Strategic Marketing and Communications
September 19, 2022
Sign that reads "San Francisco State University"

Foundation integrates racial equity in investment strategies, commits to net-zero by 2040 and fossil fuel divestment by 2025

The San Francisco State University Foundation, the auxiliary foundation of the University, makes sweeping changes to its investment policy that deepen its commitment to socially responsible investing. These updates further promote racial and social justice, environmental sustainability and climate change mitigation, which are key priorities for the University. The changes also uphold the Foundation’s fiduciary duty to reduce investment risks and identify opportunities that would secure endowment growth.

"In 2013, we divested from coal and tar sands. Then we created a student-managed fund in 2015 that provides students hands-on experience with socially responsible investing,” San Francisco State Vice President of University Advancement and Foundation President Jeff Jackanicz said. “Today’s changes and our past accomplishments underscore our iterative approach to addressing climate change and racial injustice. We're always looking inward by evaluating and refining how we're tackling these issues.”

The changes were made under guidance from the Foundation’s Board of Directors. The Foundation also consulted with Intentional Endowment Networks (IEN), an organization that supports institutional endowments create investment policies for a more equitable and low-carbon economy, and Cambridge Associates, the Foundation’s investment advisor.

“This updated policy builds on SF State’s leadership in mission-aligned investing and provides a model for other endowments,” IEN Executive Director Georges Dyer said. “The level of ambition and the comprehensive approach make this a first for endowments this size and amplifies SF State’s long-time leadership as a pioneer in sustainable investing among all endowments. It’s a smart move that will serve the institution well over long term.”

Integrating racial and social justice

According to the U.S. Government Accountability Office, less than 1% of the $70 trillion in global financial assets under management are managed by women or minority-owned firms. This means investment opportunities designed by people of color and women geared toward supporting the communities they represent have been limited.

As a result, investments and wealth bypass and exclude marginalized communities, denying these communities the capital that helps them thrive and restricting investors of opportunities to earn a strong return while advancing social change.

For that, the Foundation is codifying racial and social equity into its investment policy, which are key strategies to reducing wealth disparities and uplifting underserved and underinvested communities.

Within five years, the Foundation commits to measurable progress in growing the portfolio's diversity of underrepresented funds and fund managers. In consultation with Cambridge Associates, the Foundation will measure progress quarterly and annually using the following metrics and definitions in pursuing a racial justice lens for the endowment’s portfolio:

  • Significantly diverse shall be defined as asset managers with at least 33% ownership by women and/or BIPOC (Black, Indigenous and People of Color), or firms or strategies with at least 33% leadership by women and/or BIPOC.
  • Majority diverse shall be defined as asset managers with at least 50% ownership by women and/or BIPOC, or firms or strategies with at least 50% leadership by women and/or BIPOC.
  • Majority people of color shall be defined as asset managers with at least 50% BIPOC ownership, or firms or strategies with at least 50% BIPOC leadership.

“The Foundation’s approach to investment policy rejects status quo and incrementalism and puts their mission at the core. While other colleges and universities have begun to incorporate these concepts as part of their investment management, the Foundation is unique in putting it front and center for all investment decision-making,” Mike Pearce, a managing director at Cambridge Associates, said. “We look forward to partnering with the Foundation to build a portfolio that does not have to choose between long-term returns and positive real-world impact.”

Net-zero carbon emissions by 2040

By 2040, the Foundation aims for net-zero carbon emissions using the following benchmarks:

  • By 2030, the Foundation aims for its endowment’s carbon emissions to be 50% less than 2022 levels.
  • By 2035, it will aim for a 75% reduction from 2022 levels.
  • By 2040, it will aim for a 100% reduction from 2022 levels.

Divest in fossil fuel companies by 2025

The Foundation aims to divest from fossil fuel companies by 2025. In the meantime, no more than 5% of its endowment will be invested in fossil fuel companies.

"The new policy not only reflects the University’s values but also shows current and future donors that there's an added value giving to SF State,” Jackanicz said. “In addition to supporting a specific program or area of donor interest, endowment gifts generate strong returns while advancing our society for a better future.”

The Foundation is committed to advancing the University's mission in creating promising futures for its campus community. To learn more about the Foundation, visit its website at sfsufdn.sfsu.edu.