At DUMAC, we are committed to investing in organizations and companies that uphold legal and ethical standards. Our leadership team and staff incorporate responsible investing into DUMAC’s investment strategy by considering all risks, including environmental, social, and governance (ESG) concerns, that may impact portfolio performance.
Integrating ESG into Our Investment Strategy
Our investment strategy prioritizes achieving superior long-term returns while managing reasonable risk, all while fulfilling our fiduciary duty. We collaborate with external managers to understand their ESG policies, recognizing that these factors can materially impact financial performance. By incorporating ESG considerations into our decision-making process, we strive to address risks that could affect the overall performance of our portfolio.
Ongoing Learning and Evolution
As responsible stewards of capital, we continuously adapt and evolve our understanding of ESG factors. We recognize the need to stay at the forefront of developments and best practices within the industry to ensure our approach remains aligned with both fiduciary responsibility and the values of our clients.
Duke University
Board of Trustees
Guideline on Investment Responsibility
Duke University Board of Trustees Statement on Climate Change and Investment
DUMAC, Inc. Proxy Policy
Our ESG Progress in FY2024
In FY2024, DUMAC continued its commitment to integrating ESG factors into investment decisions. Our approach involves continuous dialogue with our managers to assess the most significant ESG risks to our portfolio. For the past several years, we have conducted an annual survey to engage with our managers on responsible investing and stewardship. The survey includes questions specifically related to our managers’ ESG policies, due diligence processes, and diversity and inclusion practices. We use these survey results to inform our discussions with managers and to enhance our understanding of their efforts towards sustainability. Key highlights from our most recent ESG survey include:
| Metric | FY24 Adoption |
|---|---|
| Managers that have adopted a formal ESG or responsible investment policy. | 66% |
| Managers that have incorporated ESG factors into their decision-making processes. | 70% |
| Managers that actively monitor and track ESG metrics for their portfolio companies. | 31% |
Our investment managers are increasingly focused on integrating ESG factors into their decision-making processes. Some managers have established comprehensive frameworks that guide their ESG efforts, while others are developing quantitative methods to measure and incorporate these factors. This growing emphasis on ESG reflects our managers’ recognition of the importance of climate awareness, social responsibility, and governance structures in shaping long-term investment outcomes.
Enhancing Our ESG Analytics and Reporting
In FY2024, we made significant strides in improving our ESG analytics and reporting processes. Specifically, we enhanced how we map investments to the UN Sustainable Development Goals (SDGs).
We incorporated the UNEP’s Sector Impact Map and detailed business activity classifications to map hundreds of revenue lines against the SDGs. By weighting these lines based on their specific impact, we provide a more standardized and accurate view of how our investments contribute to global sustainability objectives. This effort now covers a broad range of asset classes, extending beyond equities to fixed income and structured products.
Next, we employed Clarity AI’s advanced ESG analytics to evaluate the percentage of our public investments aligned with the UN Sustainable Development Goals (SDGs). Both methodologies yielded comparable results, reinforcing the consistency of our sustainability assessments.
Additionally, we advanced our internal ESG scoring process by using Natural Language Processing (NLP) to analyze the latest news and developments for both public and private investments. This provides timely, nuanced insights, further supporting our engagement with investment managers.
Supporting the United Nations Sustainable Development Goals (UN-SDGs)
The UN-SDGs, adopted by all United Nations member states in 2015, serve as a global blueprint for addressing challenges such as poverty, inequality, climate change, and environmental degradation. DUMAC is proud to support the 17 UN-SDGs through approximately $2.0 billion, or 14.3%, of our Long Term Pool’s investments. By investing in technology, services, and products that solve the world’s greatest challenges, our external managers help to support the goals of the UN-SDGs.
Rationale for Energy Investments
Energy investments, including those in clean energy, provide valuable diversification benefits, as the energy sector typically has a low correlation with other asset classes, enhancing our portfolio’s risk-return profile.
As part of our commitment to responsible investing, we view energy investments as essential for the transition to a sustainable energy system. Our allocations in this sector allow us to benefit from the growth of companies developing and deploying new technologies, while also contributing to the global shift toward a low-carbon future.