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ESG Newsletter published on January 3, 2019

A New Type of Exam for Higher Ed Bond Issuers

The demographic landscape at colleges and universities is in a period of transition. As a result, Breckinridge in November updated its framework for analyzing sustainability performance in higher education bond issuers.

While our previous framework included an environmental, social and governance (ESG) assessment, the revised framework places a greater emphasis on mobility, affordability and social metrics. We believe the new framework will help us to better identify institutions that are providing affordable access, ample opportunity, and a safe and inclusive environment for students.

Historically, the higher education space has been at the forefront of sustainability due to student activism and the research-focused nature of many institutions. In addition, colleges and universities are expanding the academic curriculum and programming that prepares students for sustainability-related professions. This increased focus on sustainability, coupled with the changing makeup of the student population, has led us to reposition our framework to better assess institutions that are adapting to the shifting trends.

As discussed in our previous post, colleges and universities will become increasingly diverse from both racial and socioeconomic perspectives over the next several decades. Also, to diversify their tuition bases, some universities have sought to increase enrollment among nontraditional students such as older students already in the workforce, international students and transfer students. Our updated framework will help us identify campuses that are proactively addressing and adapting to the changing student population. We believe the schools that find ways to appeal to the broadest profile of potential students will be best positioned to capture the bulk of enrollment growth over the next decade. Our new framework considers criteria such as:

  • Student success: With the student pool including more first-generation, low-income and diverse high school graduates,1 we expect a stronger focus on opportunity and affordability within the sector. In response, our framework now includes a measurement of students’ “mobility rate.” The mobility rate factors in the access provided to and the success of low-income students. It also evaluates how successfully a university moves these students up the economic ladder after graduation.
  • Affordability: With a rising number of low-income and first-generation students attending college, affordability will become an increasingly important issue. Our framework also seeks to identify which schools best prepare students to earn incomes sufficient to manage student loan burdens. Our greater focus on affordability and broader social advancement aligns with our integrated ESG philosophy.
  • Culture: In the wake of many highly publicized sexual abuse scandals, our updated framework considers the prevalence of violent acts against women, which can reflect a university’s campus culture and the level of safety on campus. A high frequency of such incidents could harm reputation and enrollment, as well as have material monetary implications.

In addition to incorporating these new factors, environmental and governance factors remain key considerations in our framework. For example, we analyze each institution’s climate change adaption strategy and its commitment to reducing its carbon footprint. Our framework also examines the quality and level of financial planning, disclosure and management practices.

To properly assess the holistic risk profile of an institution, it is important to integrate ESG factors into a full bottom-up fundamental analysis. Our updated higher education framework seeks to identify universities that can balance affordability and access with the quality of education. In our view, those institutions are best positioned for continued growth and resiliency.



[1] National Center for Digest Statistics, Available at 

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