In today's investment landscape, many institutions are reckoning with a fundamental question: Are our investments aligned with our mission? At this year’s Investment Stewardship Academy, Commonfund Managing Director Caroline Greer facilitated a discussion with experts in mission-aligned investing. The session explored the complexities and possibilities within this evolving opportunity set. Below is a summary of key topics covered during the discussion.
The Opportunity Set
Many organizations begin their mission-aligned investment journey with traditional ESG (environmental, social, governance) strategies, such as screening (in/out), divestment from harmful sectors, shareholder advocacy, and allocating capital to diverse or values-aligned managers.1 But what is typically considered “impact investing,” or thematic investing that has both financial and social goals, goes further. It involves an intentional commitment to achieving positive outcomes, guided by both a thesis on social outcomes of an investment and a strong business case—whether that case is about preserving capital or generating returns.
Often, responsible investing can involve simply being more engaged in the investment process to work toward both financial and social outcomes. For example, in public markets, action can include voting proxies, filing resolutions, or guiding regulatory engagement. In the private markets, institutions can support innovation directly, using capital to catalyze measurable change.
The Perception Gap
A common obstacle to pursuing mission-aligned investing is the perception that impact or mission-aligned investing requires sacrificing financial returns, or that it exists on the "fringe" of the financial mainstream. This skepticism often leads to disproportionate scrutiny, with panelists sharing that in their experience, investors agonize over each impact investment in a way that they don’t with traditional ones. Despite these doubts, there are opportunities to achieve both impact and positive returns across asset classes.
Leaders in the field argue for a shift in mindset. They suggest, rather than scrutinizing impact investments more intensely or differently than traditional investments, evaluate all investments for alignment—or misalignment—with your institution’s mission, and acknowledge that every investment has consequences—some beneficial, some harmful. The key is awareness and intention to understand the impact of their investments, alongside the social determinants of outcomes they and their institutions care about—whether that’s education, healthcare, or housing. Then, investment strategies can be designed to reflect those realities, alongside various risk and return considerations.
There is a spectrum of return expectations across all asset classes, and thoughtful alignment doesn’t mean abandoning financial rigor—it means embracing a more complete understanding of risk, opportunity, and values.
Fiduciary Duty Reconsidered
Critically, the panel emphasized that fiduciary duty at mission-oriented institutions is not only about maximizing returns but about serving constituents. By law, a fiduciaries’ responsibility is to serve and advance the mission. That might mean divesting from industries that directly conflict with the mission or revising the Investment Policy Statement (IPS) to pursue the opportunity set that reflects the institutions’ priorities.
Overcoming Institutional Barriers
Investment stewards often face internal constraints, from fear of stepping outside peer norms to limited capacity or bandwidth. But a growing ecosystem can offer support: from qualified advisors, consultants, and OCIOs, to peer learning groups like Intentional Endowments Network, Mission Investors Exchange, and Impact Finance Center. Institutions don’t have to go it alone.
With increasing regulatory challenges, institutions face real risks. However mission-aligned investing is largely about risk analysis—and every prudent investor must evaluate all risks, including environmental and social factors. The panel recommended pursuing substance over style: Communicate using language that resonates with your audience, while staying grounded in sound investment principles, such as fiduciary duty, materiality, long-term value creation, and the potential consequences of inaction.
Questions to Consider
Institutions and their investment stewards have immense power—and responsibility. The takeaway from this discussion isn’t about adopting a single approach, but about asking better questions:
- What are our core values?
- How do our investments support—or undermine—those values?
- Who are our beneficiaries, and how can we align investment policy to best serve them?
- How can we be stewards for progress as answers and opportunities arise?
- How can we partner with others, e.g. peers, membership organizations, investment managers, to gain and share knowledge and experience?
To learn more, take a look at our blog "Fiduciaries Guide to Mission-Aligned Investing" - we shared five key considerations for fiduciaries considering aligning capital with mission.
1 For more on ESG definitions and strategies, see Navigating the Changing ESG Landscape: Challenges and Opportunities
