November 11, 2010Religion: A Force
in Ethical & Green Investing
By
Ron Robins, Founder & Analyst - Investing for the
Soul
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 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 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 €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 £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 faiths… 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.
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