In early 2025, the Lewis & Clark Board of Trustees Chair established an Investment Subcommittee to Consider Updates to ESG Principles, asking the subcommittee to review whether certain types of endowment investments are consistent with the mission of the institution. Lewis & Clark has long recognized the value of incorporating environmental, social, and governance (ESG) factors with other conventional financial analytical tools when evaluating investment opportunities, with the objective of improving long-term, risk-adjusted endowment returns.
The subcommittee was specifically charged with considering two questions: (1) whether to update the College’s ESG policy to address concerns regarding investments in weapons manufacturers, and (2) whether to update the College’s ESG policy to address concerns regarding investments in companies that are the subject of human rights violations or concerns. The subcommittee was not charged with considering changes to the College’s investment policy based on any particular investment’s country of origin or on any particular geopolitical situation or conflict, recognizing that such considerations are inherently volatile, changing, and divisive, and contrary to the generally held view that the endowment should not be used to advocate specific positions on world affairs. The subcommittee, composed of student and faculty representatives, trustees and administration, conducted its work in five meetings over a three-month period, concluding in July 2025. The subcommittee analyzed the potential impact of various proposals on the portfolio, assisted by the college’s investment advisor. The analysis included whether options were feasible to implement, what associated risks might result from the policy changes, and whether such changes would impact portfolio performance and prospective returns in a material way. In doing so, the subcommittee ensured adherence to fiduciary considerations and intergenerational equity of the endowment. The recommendations of the subcommittee are summarized as follows:
- Direct exposures to weapons manufacturers. The subcommittee recommended that the endowment exclude direct exposure to weapons manufacturers, using the Military Weapons MSCI BISR screen. The subcommittee also recognized the current de minimis exposure to such investments in the endowment (with current direct exposure of approximately 0.07%) and concluded that the elimination of such exposures would have no material impact on portfolio performance.
- Indirect weapons exposures. The subcommittee concluded that it was not feasible or prudent to eliminate fund managers solely based on their weapons manufacturer-related exposures. The committee also noted the low level of such exposures in the current portfolio (approximately 0.2% of the portfolio) and recognized that implementing a complete portfolio exclusion would severely limit the college’s ability to retain and attract fund managers for the portfolio, which would risk portfolio performance. The subcommittee further agreed on an annual disclosure and an update by the fund manager on indirect weapons exposures in the portfolio, in conjunction with the other current mission-aligned investment portfolio disclosures.
- Human rights concerns. The subcommittee concluded that it was not feasible to pre-screen for potential future MSCI human rights-releated red flags, and that given the broad scope of the MSCI methodology, it was not prudent to eliminate managers solely based on the presence of flags. The subcommittee further recommended an annual update and disclosure by the fund manager on any direct or indirect exposures to companies or managers with “very severe” or “severe” flags, under the ESG Controversies & Global Norms Human Rights MSCI BISR screen. The subcommittee also recommended adding language to the investment policy affirming human rights as a mission-aligned value and that such review is a component of the fund manager’s investment due diligence.
- The subcommittee recommended that annual disclosures on weapons and human rights be incorporated into the fund manager’s annual report regarding ESG investment policy issues. An existing L&C website, maintained by the Business Office, already makes available information on various endowment investment items, including an annual update on fossil fuel exposure, Net Zero goals and diversity of managers. It is recommended that new disclosures on weapons manufacturing and human rights be incorporated into the disclosures included on the website.
The recommendations of the subcommittee were considered by the Investments Committee of the Board of Trustees on October 16, 2025. The Investments Committee unanimously approved amendments to the Investment Policy Statement to implement the recommendations. The amended policy was approved by the full Board on October 17, 2025.
