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McKnight Foundation Commits to Net Zero Across $3 Billion Endowment

The McKnight Foundation today committed to achieving net zero greenhouse gas emissions across its $3 billion endowment by 2050 at the latest. McKnight, a leading funder of climate solutions in the Midwest, is the country’s largest private foundation to pursue a net zero endowment.

This move comes just weeks before the UN Climate Change Conference in Glasgow, at a time when people across the globe are experiencing first-hand the devastating impacts of climate change. The commitment aligns with the Paris Agreement goal to limit global warming to 1.5°C to 2°C.

Net zero is a comprehensive strategy to immediately reduce greenhouse gas emissions across the entire investment portfolio—including the fossil fuel sector—while also making new investments to build a carbon-free economy. This rigorous approach requires scouring every corner of the endowment for emissions, discontinuing investments in high-emitters, such as any remaining fossil fuel investments, working with our more than 75 fund managers to decarbonize their holdings, and regularly communicating our progress.

David Rockefeller Fund and academic institutions such as Harvard and the University of Michigan and pension funds such as CalSTRS and CalPERS have made similar commitments in the last year and a half.

“The magnitude of the climate crisis requires that we take bold and deliberate action. Foundations sit on over a trillion dollars of potential climate solutions, and we invite others to join us.”

—TONYA ALLEN, PRESIDENT

“The magnitude of the climate crisis requires that we take bold and deliberate action,” said Tonya Allen, McKnight Foundation president. “Eliminating the greenhouse gas impact of our endowment allows us to employ all of our Foundation’s resources to address climate change. Foundations sit on over a trillion dollars of potential climate solutions, and we invite others to join us.”

Private foundations in the United States are required by law to spend at least 5% of their endowment each year. While foundations typically use grant dollars to support climate solutions, the remaining 95% of an endowment too often goes untapped—a missed opportunity to invest in change.

In McKnight’s case, over 40% of its $3 billion endowment has some mission alignment, and impact investments are uncapped, with $500 million committed to public and private uwekezaji wa athari that provide the ideas, technology, software, and services to decarbonize the economy.

“We have seen how bold, market-rate investments in climate solutions have spurred innovation, grown our endowment, and allowed us to increase our grantmaking,” said Ted Staryk, a longtime McKnight board member and chair of its Mission Investing Committee. “This is the experience that will guide us on the path to net zero.”

To reach net zero, McKnight will fully leverage its opportunity as an owner of assets, a customer of financial services companies, a shareholder, and a market participant in a four-part plan:

  • Set targets: Commit to net zero endowment by 2050 or sooner. Draw a road map to zero by setting interim targets for progress by 2030.
  • Invest in solutions: Continue to capitalize on investments profiting from the climate transition, and seek opportunities to drive climate risk management and greenhouse gas reductions through existing conventional investments.
  • Engage counterparts: Work with investment advisors to understand the greenhouse gas emissions of each fund manager. Cooperate with asset owners and experts to identify data and carbon accounting options to reliably assess endowment emissions. Engage with public companies we own to ensure they are setting meaningful greenhouse gas reduction targets and pivoting to profitable strategies.
  • Communicate progress: Make regular reports on progress and commit to sharing experiences with peers.
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“With the rush among investors to get into climate solutions, the size and number of opportunities will grow quickly, and McKnight will continue to be on the leading edge of the opportunity set,” said Roger Sit, board member and chair of McKnight’s Investment Committee. “We’re confident we can accomplish net zero with positive impacts on the planet and our portfolio.”

In 2015, McKnight was among hundreds of investors calling for an ambitious agreement in the lead up to COP21 in Paris. Since then McKnight has broadly expanded its impact investments and doubled its climate-related grantmaking. Net zero is yet another moment for the Foundation to lead by example.

“As we near COP26 in Glasgow, we call on all institutional investors to join us in boldly meeting this important moment on climate change,” said Elizabeth McGeveran, director of investments at McKnight Foundation. “Science is clear about the economy we must create in order to thrive, and every endowment dollar offers immediate and powerful opportunities to advance a low-carbon future together.”

Our Net Zero Commitment Builds on a Proven Track Record of Climate Investing

  • 2013: Measured and began reducing carbon intensity of public portfolio.
  • 2014: Launched impact investing program with 10% of endowment earmarked for high impact investments, and sold coal from fixed income portfolio. With a $100 million investment, created a Carbon Efficiency Strategy fund with Mellon Capital Management.
  • 2015: Joined Climate 100+ with the globe’s largest emitters to set aggressive targets.
  • 2017: Discontinued investments in companies with coal and oil sands reserves held by separately managed account managers.
  • 2019: Announced all real asset investments must have credible sustainability thesis.
  • 2021: Over 40% of endowment has mission alignment.

KUFANYA FOUNDATION ya McKNIGHT

Ya Foundation ya McKnight, a Minnesota-based family foundation, advances a more just, creative, and abundant future where people and planet thrive. Established in 1953, the McKnight Foundation is deeply committed to advancing climate solutions in the Midwest; building an equitable and inclusive Minnesota; and supporting the arts and culture in Minnesota, neuroscience, and international crop research.

UTAIFA WA MEDIA

Dan Thiede, Senior Communications Officer, dthiede@mcknight.org and 612-336-3731

Mada: Uwekezaji wa Athari, Midwest Climate & Energy

October 2021