The Seattle family foundation of Jane and Robert Edwards decided in 2014 to invest 100% of its $35 million endowment for measurable environmental benefits and competitive financial returns.
The foundation, with the help of Caprock Group, has shared the three-year journey to get there in an unusually transparent case study that illuminates the real challenges of impact portfolio construction: asset allocation, liquidity, benchmarks, manager selection, impact measurement and more.
The foundation names names, including: Aperio Group, Essex and, later Generation Investment Management’s Asia equity fund for public equities; Seattle Northwest for fixed-income; Solar Mosaic, Green Canopy Homes and Community Investment Management for private debt; and PRIME Coalition for early-stage climate innovation program-related investments. More recently, the foundation has invested in Althelia’s Sustainable Oceans Fund, Lyme Timber’s fifth fund and other private fund managers.
The results? The public equities and fixed-income portfolios have returned annual returns of 5%, net fees, over the last three years. That’s in line with benchmarks but below the foundation’s target of 8%.
Not included: returns from the illiquid private investments, which are still too early to judge (the foundation says it is “quite pleased.”)
The impact? The report claims the foundation’s investments have helped generate more than three million megawatt hours of renewable energy, abate more than two million metric tons of greenhouse gases, and conserve 11,000 hectares of forestland.
“Those statistics may be a bit nebulous, but they represent real impact at a time when it is needed most.”