By Ron Robins
Religious and faith groups have huge investment portfolios representing the third largest category of investors globally, says UN Secretary General Ban Ki-moon. And their investments are increasingly focused on ethical and green investing.
Though religion′s main interest is spirituality, we also know it is concerned with ethics, morality and stewardship of our environment. In Christianity, Islam and Judaism, God has dominion over all creation and everyone is expected to be good shepherds of it. In Hinduism, the earth is divine and to be respected. And Buddhism preaches compassion for all life and the unity of all creation. Similar sentiments are expressed in most other religions too.
Thus, it is not surprising to hear that it was probably religious groups who pioneered ethical investing. The foundations of Western ethical investing are traced to biblical times when directives were found on investing according to ethical values.
Increasingly, religious and faith groups focus on aspects of ethical investing that relate to environmental, social and governance (ESG) issues, sometimes referred to as ‘impact′ investing. In a 2010 study by 3iG, the Spain based International Interfaith Investment Group, found that, “more than 70% of religious institutionsâ€¦ practice some form of impact investing, in areas such as community development, micro-finance, affordable housing and fair trade, and not just negative and positive screening [for ESG issues].”
The 3iG organization itself represents a growing awareness among religions to better reflect religious values in their investments. 3iG “is designed to assist the Faiths in facilitating and advancing their engagement in the area of faith-consistent investing and to provide high-level research and information to enhance its development. The great challenge is to integrate faith-based principles into the world of business, particularly via investing.”
Unfortunately, it is usually difficult to obtain information on investment portfolio holdings of many faith based organizations. And even when they are revealed, real estate holdings are often not included. Nonetheless, there are some examples of how large and important are religious ethical investment activities.
One example is the bank administered by the Roman Catholic Church, based in the Vatican and known as the Institute for Works of Religion (ICW). It has assets somewhere around â‚¬5bn, (according to the Financial Times) and these are said to be second in size to those of the UN. Its focus is on ethical investments with profits going to charities and religious organizations around the world. (Note though, that the assets of Roman Catholic Churches globally are many times that of the ICW.)
Some other Christian churches, particularly in Britain and Ireland, are however, quite transparent with their investments. According to the Church Investors Group (CIG), British and Irish churches have assets of Â£12.6 bn. The CIG organization aims to help make church “investment portfolios reflect the moral stance and teachings of the Christian faith.”
In the US the Interfaith Center on Corporate Responsibility (ICCR) has nearly 300 religious and faith groups with $100 bn. in assets. The “ICCR and its members work with conscientious individual and institutional investors as well as advocacy organizations, who share all or part of ICCR’s commitment to a just and peaceful world.”
Besides the above organizations, there are other international influential faith groups assisting and promoting ethical and green investing as well. Two of the better known ones are the Alliance of Religions and Conservation (ARC) and the Ecumenical Council for Corporate Responsibility (ECCR).
The ARC “is a secular body that helps the major religions of the world to develop their own environmental programmes, based on their own core teachings, beliefs and practices… [it] now work[s] with 11 major faithsâ€¦ These faiths and their networks embrace 85% of the world’s population: some 5 billion human beings.”
The ECCR “is a church-based investor coalition and membership organisation working for economic justice, human rights, environmental stewardship, and corporate and investor responsibility. ECCR’s British, Irish and international members include representatives of many Christian denominations, faith-based investors, religious communities and orders, non-governmental organisations, [and] ethical investment managers.”
Religious investing by individuals has seen extraordinary rapid growth as well, especially in the US. According to David Kathman, a Morningstar analyst, there are now about 80 US Catholic, Protestant and Islamic-compliant mutual funds with about $29.8 bn. in assets, up from around just $500 mn. in 1997.
Similarly, among Muslims, there has been vigorous growth of Islamic financial products in many countries with institutional and private assets now exceeding $1 trillion. Islamic financial assets are mostly channelled into ethically screened investments, with some portion of their profits mandated for social and humanitarian causes.
Religion′s roots go deep into our psyches, relating to not only the caring of peoples′ spiritual welfare but to their material sustenance as well. To help fulfil their aspirations to provide the material sustenance of humanity, religious organizations are increasingly applying their staggering financial resources to ethical and green investments. They are thereby a huge and growing force in ethical and green investing.
November 11, 2010