How Robert Wood Johnson And McKnight Are Rethinking ESG For Foundations

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For some foundations, making ESG investments isn’t enough.

At least two organizations have gone a step further and set up separate pools of capital that can only be invested in accordance with their missions.

The McKnight Foundation set aside 10% of its $3 billion portfolio in 2014 for an impact investing pool. Four years later, that pool has grown to $200 million, with 40% of the endowment invested in investments that align with the foundation's mission, Fortune reports.

One example is McKnight’s investment in Arcadia, a utility company that helps both renters and homeowners in any state buy renewable power for their homes.
"We like that it creates an option for renters, who are often excluded from renewables," says Elizabeth McGeveran, the foundation's director of investments. "And in some markets, Arcadia can save you money on your utility bill, [while] in other markets it's about the same. They're building community solar to feed into the grid."

Another foundation, the Robert Wood Johnson Foundation, has set up a $200 million impact investing pool, and it's investing in everything from small businesses to research on social bond issuance, Fortune reports. "Every pension fund has exposure to social bonds," says Kimberlee Cornett, the RWJ's director of impact investing. "One of the things that the market doesn't easily make visible is who an issuance is benefiting and how that's being repaid."

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