Keene State College
PA-10: Sustainable Investment

The Sustainable & Responsible (SRI) sub-portfolio of the endowment account holds a position in the Invesco Clean Tech Fund, which holds companies that derive at least 50% of revenues from businesses that provide products or services that reduce cost and raise productivity and/or product performance, while reducing the consumption of resources and the negative impact on the environment and public health.
The SRI account also holds positions in the following funds that incorporate environmental, social and governance factors into their investment process:
• Calvert Short Duration Income Fund
• Calvert Social Investment Bond Fund
• Calvert International Equity Fund
• Domini International Social Equity Fund
• Matthews Asia ESG Fund
Examples of some of the holdings include Adobe Systems, Home Depot, Microsoft, TJX, Union Pacific, Visa, Waste Management, and Xylem. The investments exclude tobacco, weapons, gambling, alcohol, nuclear energy, Boards with low female representation, coal, and fossil fuels.

Please note that the document provided for "A copy of the sustainable investment policy" is prepared by Keene State College's external financial manager due to the process established in the Investment Policy Guidelines of the Keene Endowment Association (KEA). The KEA Investment Policy Guidelines are provided in "Additional documentation to support the submission." The KEA Investment Committee considers the sustainable investing strategy prepared by the external managers to be part of its sustainable investment policy. This approach is explained in more detail below. All documents referenced in this section are publicly available upon request.
The KSC/KEA Sustainable Investment Policy is developed in a two-fold process that works within the staffing constraints of College. This approach is necessary because of resource limitations at Keene State College; the College does not have the in-house expertise or staffing to develop and manage all investing policy criteria without external support. The KEA Investment Committee develops overarching policy directions and guidelines, then uses a competitive process to select external fund managers to develop the detailed investment policies. The KEA Investment Committee relies on the investment managers to develop the specific investment strategies and guidelines, such as the sustainable investing guidelines, but reviews, approves, and oversees implementation of these guidelines. By this approach, those guidelines are considered part of the KSC sustainable investment policy. The sustainable investment policy is the blend of the KEA’s overarching guidelines with the specific criteria developed by the external manager.
SUSTAINABLE INVESTMENT POLICY GUIDELINES
The overarching sustainable investment policy was established by the Keene Endowment Association through an Investment Portfolio Change Resolution in 2016 that called for “socially responsible/sustainable investment.” This was done to meet donor requests, address the needs determined through the AASHE STARS assessment, and to better achieve College goals for sustainability and climate action. The KEA Investment Policy Guidelines stated that, “Management of the [Endowment] assets should ensure a total return (income plus capital growth) sufficient to preserve and enhance the principal of the funds, and at the same time provide a dependable source of income. The Sustainable and Responsible Investment Fund objective is to invest in undervalued, high-quality companies that provide long-term competitive financial returns as well as a positive impact in the communities and environments in which they operate.” Furthermore, environmental and social factors were to be incorporated into the decision-making process for all funds contained in the Endowment.
The overarching investment guidelines also call for "investment objectives and strategies designed to assure INTERGENERATIONAL EQUITY."
The Investment Committee of the KEA is charged with:
1. Establishing and periodically reviewing investment objectives, policies, and guidelines
2. Selecting one or more qualified investment managers and custodians
3. Meeting with each investment manager regularly and reviewing the objectives and performance.
These roles and responsibilities are defined in the KEA Investment Policy Guidelines (most recent revision June 6, 2019). These stated roles of the KEA Investment Committee are very important because they outline how the investment policy works at KSC, including for sustainable investment. The KEA Investment Committee establishes "investment objectives, policies, and guidelines." The KEA Investment Committee then uses these objectives, policies and guidelines, plus awareness of KSC objectives, to develop selection criteria to find a suitable investment manager and custodian for the Endowment. The KEA reviews proposals from prospective investment managers, paying special attention on their sustainable investment strategy. Once approved by the KEA, that strategy is considered part of the KSC/KEA sustainable investment policy. As such, the overarching KEA sustainable investing policy guidelines are supplemented by more specific guidelines including:
•Consideration of environmental, social, and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive social impact
•Using a thorough research process that explores ESG factors such as:
o Environmental: policies and programs that reduce environmental impact, historical records, future plans and goals, carbon emissions and GHG reporting
o Social: diversity, treatment of employees, commitment to the community
o Governance: effective and diverse leadership, transparency, future vision
•Pursuing companies offering a positive impact, not just negative screening.

See preceding response. The Keene Endowment Association (KEA) Investment Committee Investment Policy Guidelines state that, “Management of the [Endowment] assets should ensure a total return (income plus capital growth) sufficient to preserve and enhance the principal of the funds, and at the same time provide a dependable source of income. The Sustainable and Responsible Investment Fund objective is to invest in undervalued, high-quality companies that provide long-term competitive financial returns as well as a positive impact in the communities and environments in which they operate.” Furthermore, environmental and social factors were to be incorporated into the decision-making process for all funds contained in the Endowment.
The overarching investment guidelines also call for "investment objectives and strategies designed to assure INTERGENERATIONAL EQUITY."
These guidelines are used to develop specific selection criteria that are used to select external fund managers. The KEA Investment Committee is responsible for establishing and periodically reviewing investment objectives, policies, and guidelines and selecting one or more qualified investment managers and custodians at least every 5 years.
In doing so the KEA Investment Committee takes into account the College's overall values and specific goals and commitments. For example, the College's values specifically call for:
Social justice and equity in our community and in our curriculum.
Educational challenge and support for a wide range of learners.
Physical and financial access and support.
Balanced development of mind, body, and character.
Diversity, civility, and respect.
Civic engagement and service to the community.
Environmental stewardship and sustainability.
Partnerships that enhance the quality of life in the Monadnock region, New Hampshire, and the world.
These are qualities expected in an investment approach. Similarly, the College has developed College-Wide Learning Outcomes on sustainability, multiculturalism and diversity, well-being, and civic engagement.
Furthermore, KSC uses AASHE STARS for goal setting, policy development and planning, taking to heart the guidance and recommendations of the AASHE STARS Technical Manual and reporting form.
The College's overarching guiding principles influence and guide investment approaches. The KEA takes these into account when considering how the College's resources are invested. They also balance donor needs and expectations. As such, the Investment Policy was changed in 2016 to call for sustainable and socially responsible investing.
The Policy is applied through oversight by the Keene Endowment Association of an external financial management team that applies a rigorous Sustainable and Responsible Investment Strategy. The strategy includes careful research of prospective funds and companies, the combination of fundamental financial analysis with SRI criteria, implementation of an ESG dashboard, and an overall objective of "investing in high-quality companies with diverse teams that are committed to: improving their environmental impact, developing safe and healthy products and services, and treating their employees and the community with dignity." Positive (e.g., volunteerism, community involvement, and philanthropic goals) and negative (e.g., no tobacco, weapons, or fossil fuel) are applied.

Keene State College does not engage in proxy voting, but its external manager, Cambridge Trust, the investment advisor hired by the KEA Investment Committee, to manage the endowment portfolio, uses Institutional Shareholders Services (ISS) SRI Guidelines for the voting of proxies for the SRI portion of the endowment. Cambridge Trust also "prefers private, positive, cooperative engagement with the companies they own" in the portfolios they manage.

The investment advisor for the endowment has been managing an SRI strategy for more than five years. It does periodically engage with corporations to suggest best practices and areas for improvement. The conversations are collaborative and have not risen to any formal filing of shareholder resolutions or publicly published letters to the companies in question. Private email letters and conversations are submitted to the companies for consideration as appropriate.

The KEA specifically selected an external financial management firm that applies positive and negative screens. This is fundamental to the KEA Investment Policy.
The investment advisor for the endowment does not invest in any companies with material revenues from firearms, tobacco, gambling, alcohol, nuclear energy, coal and fossil fuels. Investments are also not made in any company that does not have at least 25% female membership on the Board of Directors at the time of purchase. As part of the consideration of what is not included in the portfolio, emphasis is placed on contribution to the good of society as a whole.

The KEA indirectly participates in networks and networking around best practices on behalf of all investors in its Sustainable & Responsible Investment (SRI) strategy through its external investment management firm. The Cambridge Trust KEA investment manager is a member of BASIC Boston, an SRI-focused local group. Additionally, the co-Portfolio Manager of the Cambridge Trust SRI strategy is a member of the CFA Boston Sustainability Committee.

Information for this section was provided by Keene State College's Advancement Division, their liaison the the Keene Endowment Association, and Cambridge Trust, the private bank and investment company selected by the Keene Endowment Association to oversee the Keene State College Endowment.