From foundations to individuals, the impact investing world is stepping up to meet the challenges posed by the COVID-19 crisis. Faith-based investors may be particularly well-positioned to align their portfolios with constructive responses to the pandemic. In doing so, they are demonstrating the importance of faith-based investing in a crisis, as well as faith-based organizations’ increasing interest in impact investing.
Faith-Based Investing in a Crisis: Where Investors Are Focused
These investors already have a track record of supporting sustainable and socially oriented measures. In addition, they may have particular funding traditions well-suited to every stage of the COVID-19 response paradigm, from immediate response to long-term recovery and resilience. Faith-based investors are targeting several areas, including:
Even before COVID-19 hit, faith-based investors were involved in fossil fuel divestment, green investments, and other climate change–related issues. Last year, at the Financing the Future summit in Cape Town, 22 faith groups pledged to cut financial ties with fossil fuels, redirecting approximately $11 trillion in assets from coal, oil, and gas companies.
Such activism has increased in light of the pandemic. For example, more than 40 faith institutions from 14 countries recently committed to divest from fossil fuels, while also urging that economic recovery accelerate a worldwide shift to sustainable, low-carbon energy.
Engagement with Pharmaceutical Companies
Investor members of the Interfaith Center on Corporate Responsibility recently sent letters to the CEOs of 14 pharmaceutical companies emphasizing the critical global role these businesses can play in responding to the crisis. With that in mind, they called for a collaborative approach in the development of diagnostics, treatments, and a vaccine. They asserted that the strategy should include everything from sharing data to a global pooling of intellectual property rights covering any COVID-19–related technologies.
Doubling Down on Impact to Address Injustice and Live by Values
For many investors, faith-based investing in a crisis provides an opportunity to use their investments to address injustice. For example, in October 2019, a group of six Catholic organizations signed the Catholic Impact Investing pledge, agreeing to align their investment portfolios with impact. New signatories have signed on more recently, bringing the total to 21 organizations representing $40 billion in assets. “There’s a heightened sense of urgency now to serving populations at risk,” Maggie Stohler of the Catholic Impact Investing Collaborative told ImpactAlpha.
Investors have increasingly noted the mutual sympathies between Islamic investing and impact investing. Now, some are pointing to the potential for Islamic finance to help provide short-term relief to those affected by the pandemic. For example, because Zakat—the Islamic practice of giving obligatory charity to someone in need—has to be disbursed within a year, it aligns easily with the early emergency action phase.
Seven Jewish foundations just launched the Jewish Community Response and Impact Fund, an $80 million fund that will give emergency grants and short-term, interest-free loans to Jewish nonprofits affected by the pandemic. To speed up the process, program administrators plan to search for and reach out to likely organizations, instead of accepting unsolicited applications.
As the effects of the crisis keep unfolding, faith-based investors are likely to continue drawing on their histories of impact to support recovery around the world.