Faith and Values Inspired Investments

Both the Jewish and Christian communities from their earliest documents display a debate about with the foundational questions of ownership, agency, interest and usury. The Holy Quran also offers some unique teachings.
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The relationship between faith-consistent (FCI) and socially responsible investing (SRI) was on the agenda of the Tenth Harvard University Forum on Islamic Finance and is a question that surfaces frequently. As both sectors continue to increase in size and therefore influence it may be instructive to consider a few of the learnings that have emerged when this question surfaces.

From the outset it is useful to recall that SRI has its roots in the customs and practice of religious traditions and in practice today the two approaches to the the investment process display a number of similarities. Both the Jewish and Christian communities from their earliest documents display a debate about with the foundational questions of ownership, agency, interest and usury. The Holy Quran also offers some unique teachings on the accumulation of wealth and the accrual of interest and other principles for praxis have emerged from the teachings of other traditions.

The teachings from different faith traditions were further enhanced by the contributions of the Quakers, other Christian denominations and movements. they were also enriched by the commitment of individual believers who were determined to refine the principles and tools that could be applied to the investment process.

The evolution of these disciplines (FCI and SRI) demonstrates a significant overlap on the principles, criteria and tools that guide both approaches. The institutions and practitioners in both fields find common ground in many of the coalitions and guiding mechanisms that have been developed and they cooperate frequently in their application.

For the FCI community the point of departure is explicitly grounded in the teaching of their particular faith tradition and is informed by a vision and horizon that is rooted in the transcendent. This starting point immediately provides a deep and expansive foundation for the work that is undertaken related to all social and environmental issues. Belief hat the Divine is the source of all that exists and that all that is created is a reflection of the Divine establishes a series of principles for guiding and evaluating all human-human and human-earth relationships and interactions.

General principles and criteria that have been developed to guide the application of these beliefs are grouped around human dignity, human rights, sustainability, responsibility and the precautionary principle. These are further delineated in various legal definitions and standards that have been codified into various laws, treaties and agreements. They have also been elaborated in various voluntary principles and codes that have been proposed and or adopted by institutions, corporations or civil society.

The starting point for SRI funds or practitioners can, depending how long they have been around, historically have been a particular faith tradition that is not explicitly referenced to ground their mission or operations today. It can also be rooted in the values or experiences of the individual who create the funds or in the values and experiences of individual investors.

While the SRI community shares many of the general principles and criteria that are found in the FCI community they have more recently pioneered much of the work that has been done around corporate governance. These benchmarks which promote transparency, accountability and greater checks and balances have also been adopted in the FCI community.

The tools of screening and the exercise of active ownership of shares in corporations are widely used by both groups. So too are the practices of filing resolutions and active engagement with the management of corporations. These alliances are important both for the resources and the leverage that they can bring together in fulfilling the respective missions of their institutions. Initiatives in micro finance and positive social impact investing are some of the more recent areas of collaboration.

They have both also remained steadfast in their commitment to both belief and values driven investing while expecting market rate returns. For a long time they were rebuffed by mainstream investment institutions and practitioners who insisted that profits were being sacrificed because of the introduction of beliefs and values into the long standing accepted investment process. Fortunately their approach and their perseverance have been vindicated and drawing attention from many quarters.

The good news for both groups is that more people and institutions are learning about their approaches and want to participate. This means that the hard work that has been invested in developing principles, criteria, screens and tools is paying off. It has also been enhanced by advances in technology that have refined their tools and operations and made them accessible to larger audiences.

Fostering and preserving both of these sectors as options in the investment community is important. Their appeal to important segments of civil society and the unique insights that they contribute to the investment process can continue to enrich and engage the dominate investing paradigm.

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