University of Michigan to invest $300M in socially responsible companies, Ono says

The University of Michigan will invest $300 million of its short-term working capital into companies that follow environmental, social and governance — or ESG — practices, new President Santa Ono said during a speech to the campus Thursday morning.

It will also deposit "significant" sums of its money into community banks in Flint, Dearborn, Ann Arbor and eventually in Detroit in an effort to spur local lending.

Ono made the announcement in-person during a leadership welcome speech in an auditorium at the Ross School of Business. It was his first major speech outlining his priorities since he took over as president in the middle of October. Like his predecessors, he used the occasion to highlight various initiatives underway and new ones coming and took a few questions from the audience. Unlike his predecessors, he didn't remain onstage during his Q&A time, instead walking up and down aisles to get closer to those asking questions.

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He announced the investment during a section of the speech devoted to talking about his desire for the university to be strongly committed to diversity, equity and inclusion.

“When we talk about DEI, we don’t always think about university finances,” Ono said. “Yet ESG investing and supporting small, local banks are among the many ways we can work more strategically to reinforce and uphold our obligations to create a better and more just world.”

The short-term working capital will be used to make the investments. That's a different pot of money than the university's $17 billion endowment.

To help it make the investments, U-M work with PFM Asset Management and metrics provided by Sustainalytics, a third-party ESG research firm. U-M plans to invest only in the debt securities of high-performing companies that meet a certain ESG rating threshold, the university said in a news release.

“With the capital the university has to invest, there is more we can do than just capture returns,” said Geoffrey Chatas, executive vice president and chief financial officer, in a statement. “We can make a difference, and we can help others make a difference. We just need to find creative ways to use the tools we have. That’s what this is.”

U-M will also deposit tens of millions of dollars into local banks. Initial deposits are being made with ELGA Credit Union in Flint, Dearborn Federal Savings Bank and Bank of Ann Arbor, with additional deposits expected in other financial institutions in the coming months, the school said. This initial phase of the program will center on banks most closely tied to their local communities, university officials said in a news release.

The second phase will focus on working with the banks to develop programs that provide additional benefits to disadvantaged communities because of the university’s involvement through enhanced lending and community engagement, the university said.

Contact David Jesse: 313-222-8851 or djesse@freepress.com. Follow him on Twitter: @reporterdavidj

This article originally appeared on Detroit Free Press: University of Michigan to invest in socially responsible companies