Bates College
PA-10: Sustainable Investment

From our fund managers, Hall Capital Partners (HCP) on Methodology

Sustainable industries (e.g., renewable energy or sustainable forestry)
- We looked through the portfolio of any fund likely to invest in companies in “sustainable industries” and added up the current value of all relevant companies (using the latest available data, either 3/31 or 6/30)
- The definition of “sustainable industries” includes ESG analysis as a process requirement and is conducted for every potential investment decision

Businesses selected for exemplary sustainability performance (e.g., using criteria specified in a sustainable investment policy)
- Given the lack of sustainability ratings in the private markets, we focused this analysis on the public equities portion of the balance sheet
- Within that scope, we identified any companies that CATS’ public equities managers own with a Sustainalytics risk score of “Low” (indicating strong performance on sustainability factors), and calculated the aggregate exposure to those companies
- We relied on Sustainalytics given it is recognized as a market leader in the sustainability ratings space, and we believe their ratings are founded on rigorous analysis

Sustainability investment funds (e.g., a renewable energy or impact investment fund)
- Any fund with an explicit mandate to (i) target sustainable companies/investments (e.g. Climate Adaptive), (ii) integrate sustainability considerations into the investment process to a rigorous degree (e.g. Generation Asia), or exclude investments in fossil fuels and related industries (e.g. Farallon F5)

Total endowment value (can be rough estimate): $419M as of 6/30/2022

Values (if any) of investments in:

Sustainable industries (e.g., renewable energy or sustainable forestry): 7.3%

Businesses selected for exemplary sustainability performance (e.g., using criteria specified in a sustainable investment policy): 9.1%

Sustainability investment funds (e.g., a renewable energy or impact investment fund): 8.8%

Community development financial institutions (CDFIs) or the equivalent: Not applicable to the endowment

Socially responsible mutual funds with positive screens (or the equivalent): Not applicable to the endowment

Green revolving funds funded from the endowment: Not applicable to the endowment

Investment
Bates believes that incorporating the long-term risks of climate change into
the fundamental work of managing the endowment leads to stronger and
more durable investment results. Consistent with the college’s principled
and pragmatic approach to sustainability efforts on campus, Bates has
similarly considered environmental principles when investing the college’s
endowment.
Since 2015, the college has halved its investment in traditional fossil
fuel-based energy companies from more than six percent to three percent
of the endowment, following a steady plan to reduce exposure over time.
We have achieved this through a number of actions, including liquidating
our public energy-focused funds, allowing our private energy partnerships
to wind down, electing to transition alternative investments into a
fossil-fuel-free share class, and screening our bond portfolio to eliminate
oil, gas and coal holdings.
Going forward, Bates has formalized efforts aimed to further reduce
endowment holdings in fossil fuel related companies. Specifically, Bates will:
• Instruct managers of separately managed equity accounts to sell all stocks
of fossil fuel companies, such as oil, gas, and coal, and to refrain from
purchasing these types of securities in the future.
• Elect “fossil fuel-free” share classes of alternative investments whenever
available.
• No longer commit to new investments in private fossil fuel extraction,
exploration, and production funds. The college’s last commitment in this
area was made in early 2017, and the college’s involvement with these
investments will end as they wind down.
• Actively seek to add renewable resource-focused investments (wind, solar,
and other green-specific investments) to the endowment.
We believe these actions are consistent with the college’s efforts to
incorporate environmental implications into our behaviors and activities on
campus. Furthermore, we believe these actions reflect our commitment to
act globally and responsibly to combat the climate crisis.
- from Sustainability 2030 Roadmap

Bates uses our Sustainability Roadmap (see above) to inform and guide our endowment managers, Hall Capital Partners.

In the past year, our investment committee, and the larger body of the board of directors voted to adopt the endowment investment guidelines in our sustainability roadmap, which set forth guidance to 1) instruct managers of separately managed equity accounts to sell all stocks
of fossil fuel companies, such as oil, gas, and coal, and to refrain from
purchasing these types of securities in the future; 2)elect “fossil fuel-free” share classes of alternative investments whenever
available; and no longer commit to new investments in private fossil fuel extraction,
exploration, and production funds. The college’s last commitment in this
area was made in early 2017, and the college’s involvement with these
investments will end as they wind down. Also to actively seek to add renewable resource-focused investments (wind, solar,
and other green-specific investments) to the endowment.

Hall Capital Partners (HCP) works closely with the endowment’s underlying managers, not directly with portfolio companies.

• Instruct managers of separately managed equity accounts to sell all stocks
of fossil fuel companies, such as oil, gas, and coal, and to refrain from
purchasing these types of securities in the future.
• Elect “fossil fuel-free” share classes of alternative investments whenever
available.
• No longer commit to new investments in private fossil fuel extraction,
exploration, and production funds. The college’s last commitment in this
area was made in early 2017, and the college’s involvement with these
investments will end as they wind down.
• Actively seek to add renewable resource-focused investments (wind, solar,
and other green-specific investments) to the endowment.
We believe these actions are consistent with the college’s efforts to
incorporate environmental implications into our behaviors and activities on
campus. Furthermore, we believe these actions reflect our commitment to
act globally and responsibly to combat the climate crisis.
- from Sustainability 2030 Roadmap

Hall Capital Partners (HCP), OCIO, participates in investor networks, inter-organizational collaborations and is a signatory to UNPRI. HCP has a team dedicated to ESG investing (called Full Consequence Investing). Using the FCI framework, HCP considers every investment’s risk and opportunity while also factoring in corporate governance and environmental and social factors. HCP works closely with our fund managers, and also engages with the broader ecosystem through our work with partner organizations and our involvement in industry convenings. Our 2022 Impact Report is attached and please let us know if you have any questions.