As microcosms of society that foster learning and exploration, higher education institutions often respond to global shifts and reflect the values of younger generations. Students, faculty, and researchers together tackle the complex challenges facing our ever-evolving societies in more ways than one, driving intellectual revolutions that resonate far beyond campus borders.
One of the most powerful vehicles of change is money. Many higher learning institutions have an opportunity to signal their values and give their support to causes their communities care about through their large endowment funds — while still gaining sizable returns.
And almost all U.S. higher education endowments are doing just that. While divestment measures get the most press, plenty of endowments are using other investment tools such as evolving ESG investment policy, ESG pools, and clean energy investments to transform their own funds and support green technology.
University Endowments as Vehicles for Change
According to the 2023 NACUBO-Commonfund Study of Endowments — an annual comprehensive analysis of investment returns, asset allocations, and governance policies for U.S. higher education endowments — 98% of university endowments consider ESG factors in their investment decisions.
A 2020 report by the Intentional Endowments Network (IEN) titled “Financial Performance of Sustainable Investing: The State of the Field and Case Studies for Endowments” examined nearly a dozen higher education institutions that have adopted ESG, fossil fuel divestment, and other sustainable investment strategies.
Looking at these academic endowments and foundations (including Arizona State University, North Carolina State University, University of New Hampshire, and University of California) that were early adopters of ESG investment, these organizations divested from fossil fuel funds, started ESG pools, and set goals for investments in clean energy.
Climate Solution Investors
Just as they invest in education and students, universities are well set up to invest in growing companies and industries that are on the cutting edge to help them grow..
Many academic institutions are not only epicenters of the energy revolution and on the cutting edge of new green technology due to research and collaboration, but are actively invested in renewable energies, clean energy storage solutions, and energy efficiency and sustainable transportation technologies through their endowments.
By not just divesting from fossil fuels or using exclusionary strategies, universities are taking action to help combat the climate crisis through their endowments and investments.
Green Investment Without Sacrificing Returns
The IEN report found that sustainable investment strategies can be implemented without sacrificing financial returns and emphasized that, while the case studies are not exhaustive, they demonstrate that mission-aligned investing can positively impact stakeholders and communities while maintaining or even enhancing financial performance.
“This growing body of knowledge challenges the persistent assumption that sustainable investing necessarily means accepting lower returns. Institutional investors are seeing that the opposite is more likely true – that a smart approach to considering ESG factors can help reduce risk, avoid losses, uncover opportunities for strong performance, and improve overall financial returns.“.
And this is what we at EGÉA SRI have found for our own customers, as well.
The Morgan Stanley Institute for Sustainable Investing’s ‘Sustainable Reality’ series, which we recently reported on, continued to show that, despite a slower year, sustainable funds’ total Assets Under Management (AUM) reached a new record high of $4.13 trillion in 2025. Overall, sustainable fund returns over the last seven years have still outperformed that of traditional funds. 89% of sustainable funds delivered positive returns in the second half of 2025, compared to 84% of traditional funds, showing an investment focused on ESG factors can pay off.
These returns can come for institutional and individual investors alike. While universities and colleges have endowment funds and management teams, individuals have to seek out their own council. At EGÉA SRI, we focus on bringing sustainable investment knowledge and resources to help our clients make sound and educated investments decisions and providing individualized and tailored value-based investment options. Contact us today for a free consultation or more information on how ESG-focused investing can contribute to both resilience and returns.
This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results. All investments involve the risk of potential investment losses, and no strategy can assure a profit. There is no guarantee that a company with a strong ESG score or one that focuses on sustainable investing will outperform a company with a lower score or without that focus in any given market environment.
