Our Values in Action: Our Journey Towards Mission-Aligned Investing

In the past several years, mission-aligned investing has gained traction in the philanthropic sector, despite being an investment measure for sustainability and social impact in the business world for decades.

We are among philanthropic institutions committed to continuously identifying and investing in funds that align with our mission and values as a foundation. Since our reconstitution in 2017, our Board of Directors and Finance Committee have strongly advocated investing our assets to align with our core values and mission of achieving health equity in our service region and reducing exposure to funds and investments that do not. We have been on this journey for the past few years, and while we reached investment milestones, we are still learning and evolving in our mission-aligned investing journey. We seek to share what we have learned and the challenges we have faced along the way to add to the broader conversation happening in the sector about the topic.

We are in the initial stages of this journey and are focused on defining what mission-aligned investing means to us. As a starting point on our path, we began to increase the number of ESG (Environmental, Social and Governance) investments in 2018 and have continued to refine our investment approach and strategy.  

BUT FIRST, WHAT IS ESG INVESTING?

The concept of socially responsible investing (SRI) is not new, as it has been in existence for decades. SRI was based on ethical and moral criteria to eliminate or avoid investments in companies or activities that do not align with an organization’s values (ex. avoiding investments in businesses that engage in tobacco production.) Over the years, the concept has evolved into Environmental, Social and Governance (ESG) investing, also called sustainable investing, a strategy under the broader idea of mission-aligned investing.

This investing type can look different across organizations as their strategies can be specific to their unique mission and values. While there is no industry standard definition of ESG, Robeco, an international asset manager, provides the following definitions:

• • • Environmental – Businesses that engage (or not) in efforts to address climate change, such as greenhouse gas emissions, waste management and energy efficiency.    
    • Social – Factors contributing to a business’ “social score”, include efforts to address human rights, labor issues, workplace health and safety, and its engagement with local communities.  
    • Governance – Organizations whose rules or principles outline the “rights, responsibilities, and expectations of corporation’s stakeholders.  

MISCONCEPTIONS OF MISSION-ALIGNED INVESTING

In past years, there has been a hesitancy in the philanthropic sector to commit to mission-aligned investing due to an outdated perception that embracing ESG comes at a cost to financial returns.  However, this perception is changing. Institutional investors are increasingly expecting companies to engage in needed change in our society. This trend results from the events our country has experienced in the past two years—the COVID pandemic, demographic shifts, climate change, our country’s racial reckoning and a new, younger generation of investors. 

OUR JOURNEY SO FAR

In collaboration with our Outsourced Chief Investment Officer (OCIO), Fiducient Advisors, our journey started with several conversations that identified key ESG factors representative of our Foundation’s values. It is important to note that identifying funds and organizations engaging in ESG efforts is more art than science. There is no standard way that companies define their sustainability activities. Despite that, with support from our OCIO and input from our Finance Committee, our investment criteria are centered on the following factors that speak to our approach to address the social determinants of health and advance our mission to achieve health equity: 

• • • Improving access to quality health care 
    • The promotion of human rights, including but not limited to the equality of gender, race, and sexuality 
    • The promotion of healthy living (i.e., agriculture, clean water, affordable housing, etc.) 
    • The promotion of community investment 

• • • The promotion of good business ethics and employment practices 

As of Q1 2022, approximately 25% of our investment portfolio is comprised of ESG investments and we plan to steadily increase that percentage in the next year.  

LEARNING ALONG THE WAY

We are still on our path towards having most of our investment portfolio be comprised of ESG investments and recognize our approach is an evolving one. We will continue to refine our evaluation criteria and learn about other mission-driven investment strategies and how they align with our work as a foundation.

In the next few months, we plan to share more about this journey to inspire more conversation about this topic in the sector. Stay tuned! 

ABOUT THE AUTHOR

Elva Gonzalez, CPA

Chief Financial Officer

Elva oversees all financial and accounting work for the Foundation. She brings over 20 years of experience in financial management in both nonprofit and private sectors.