The roots of sustainable and responsible investing (SRI) can be traced back to religious movements. As early as the 18th century John Wesley, the founder of Methodism, recognised the extent to which the use of money was the second most important aspect of New Testament teachings. Quakers are often considered the founders of SRI and as they settled in North America they refused to invest in business involving the production of weapons and which used slavery. This American tradition was extended in 1971 by Methodists, who established the Pax World Fund which avoided investment in businesses involved in armaments, alcohol and gambling. Europe has also seen its fair share of religious activism, through the work of Methodists and Quakers in the UK, who worked to develop funds based on ethical and social considerations.
Other examples of funds set up by religious groups are found in Sweden, with 1965’s Ansvar Aktiefond Sverige, France, with the launch of the Nouvelle Strategie Fund in 1983, and in the Netherlands with the Het Andere Beleggingsfonds. Many more examples followed in other parts of Europe and it certainly appears that the trend has not slowed down; if anything, it is gathering steam.
Urbi et Orbi
Another push is coming from Pope Francis, who made a clear link between investors profit and solidarity as he spoke before a Conference on ethical investing in 2014. On that occasion, the Pope talked about ‘impact investors’ who focus on improving communities, reducing poverty and limiting social inequality, with the help of financial institutes, all while keeping in line with the social doctrine of the Church. The Pope took the chance to criticise the way in which some financial markets are shaping the destiny of entire communities, instead of serving their needs. Focusing too much on a self-serving financial system, instead of working towards a financial system capable of serving the needs of the economy and embed social and environmental principals.
The recent Vatican document Oeconomicae et pecuniariae quaestiones (Considerations for an Ethical Discernment Regarding Some Aspects of the Present Economic-Financial System), takes strong positions on shareholder risk, subprime mortgages, derivatives, credit default swaps, interbank loans (LIBOR), shadow banking systems, and offshore tax havens. The document, in particular, has some strong words of encouragement for those who engage in SRI, emphasising the importance that even small individual investors have and their potential to move the needle in a better direction.
The Paris Agreement
It certainly seems that the Church is making the most of the emphasis currently attached to sustainable finance and responsible investing and it intends to continue showing great support for this movement. During July, the Church of England agreed to divest from oil and gas companies by 2023, during the General Synod. In particular, it voted to divest its National Investing Bodies (NIBs) from companies that are not aligned with the Paris Agreement. Already in 2015, the Church of England had taken the decision to divest from companies involved in the exploitation of coal and tar sands. The 2023 deadline has been carefully devised with the ambition to make it as realistic as possible and in full alignment with the time frame of Climate Action 100+.
The Third Vatican Conference on Impact Investing held in Rome in July, as well, was another concrete example of how religious communities intend to use finance to help the poor and those in need. Impact investing has increasingly featured prominently as part of the mission of the Catholic Church. Very much in line with the words and will expressed in Laudato Si, Pope Francis’s second encyclical, the Church is beginning to report how choosing investments that are consistent with the Catholic ethics is in line with its ambition and a valuable tool to accomplish its mission.
Though the philosophy of SRI is very much embedded in the teachings of religious organisations, in the past there has consistently been a lack of focus on the investment attitudes of these actors and the way their work to promote it further. Today seems to be an excellent time to change that and for sustainable finance to have a positive impact on the neediest in society.
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