Religion: A Force In Ethical & Green Investing

By Ron Robins, Founder & Analyst, Investing for the Soul

Blog Enlightened Economics; twitter

First published November 11, 2010, in his weekly economics and finance column at
alrroya.com

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. Buddhism
preaches compassion for all life forms and the unity of all creations. 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 per cent of religious
institutions.... 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 organisation 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 organisations. 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 €5 billion, (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 organisations 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 £12.6bln. The CIG organisation aims at
helping make church “investment portfolios reflect the moral stance and teachings of
the Christian faith.”

In the US the Interfaith Centre on Corporate Responsibility (ICCR) has nearly 300
religious and faith groups with $100bln. in assets. The “ICCR and its members work
with conscientious individual and institutional investors as well as advocacy
organisations, who share all or part of ICCR's commitment to a just and peaceful
world.”

Besides the above organisations, 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 faiths… These faiths and their networks
embrace 85 per cent 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
$29.8bln. in assets, up from around just $500 million. 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 organisations
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.

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