The University of Illinois System has invested nearly $160 million of the system endowment into its commitment to sustainability, becoming the first investor in a new environmentally and socially focused strategy launched by BlackRock Inc., a global asset manager and leader in sustainable investing.
The three-university system’s lead investment in BlackRock’s new sustainable strategy is rooted in the high-aspiration goals of its Guiding Principles, which call for managing both its physical and fiscal resources with future generations in mind.
Based on the conviction that more sustainable portfolios will drive better long-term investment outcomes, BlackRock’s strategy tilts toward companies that rate highly on economically relevant environmental, social and governance (ESG) criteria within the Russell 3000 U.S. equities index. In creating the BlackRock ESG Insights Strategy, BlackRock assessed companies’ performance across various sustainability factors and the relevance of sustainability factors on companies’ future financial performance.
The dual focus on both returns and issues such as air and water pollution and gender parity matches the U of I System’s values and a commitment to sustainability laid out in a new set of Guiding Principles adopted last year, President Tim Killeen said.
“We were handed an important mission more than 150 years ago – to advance society through world-class education and pioneering scholarship,” Killeen said. “Serving the needs of progress for the next 150 years is only achievable if we are fiscally resilient and thoughtful stewards of our environment.”
He said the U of I System invested most of the U.S. equity allotment of its $720 million endowment into the BlackRock strategy, putting it at the leading edge of a growing global movement toward investing with a focus on financial and environmental stability.
Along with the system’s Guiding Principles, the BlackRock strategy aligns with the Illinois Sustainable Investing Act, legislation that became law in January that compels public and government agencies to develop and implement sustainable investment policies.
Killeen said the BlackRock strategy will invest in companies that mirror the U of I System’s values on sustainability and environmental protection, as well as other important issues such as labor practices, product safety, talent management, ethics and diversity.
The strategy is underscored by a proprietary ESG framework developed by BlackRock Sustainable Investing (BSI), which evaluates more than 250 key ESG performance indicators across 77 industries related to 15 distinct ESG issues, including clean technology, company culture and talent- and energy- management.
“The research we’ve put into this strategy is rooted in our commitment to help clients achieve their sustainable investment objectives,” said Brian Deese, global head of sustainable investing at BlackRock. “It’s encouraging to see the resilient performance of sustainable strategies during the pandemic and recent market turbulence, and it’s further validated by large clients like U of I System stepping forward to invest in the fundamental metrics of how companies use human and natural resources to improve both long-term financial and sustainability outcomes.”
The system’s decision follows years of researching the evolution in the sustainable investment landscape and available products. Following extensive due diligence on the strategy and underlying factors, BlackRock’s ESG strategy not only met the system’s high standards for investing, but also was found to be an excellent complement to the endowment’s investment philosophy.
The U of I System’s sustainability efforts are inspired by the goals of its Guiding Principles, which lay out its position on six pressing academic and campus culture issues currently facing higher education across the country.
Regarding sustainability, the Guiding Principles state: “Our sustainability legacy will reflect the effort we put into it. By acting mindfully, we will leave our universities, our state, and our world better than we found it.”
