ESG Investing

Why Faith-Based Investors Are Crucial to Impact Investing


Although faith-based investing is only one subset of impact investing, religious organizations have been responsible for leading the way on a number of issues and setting positive examples for the sustainable investing community. Here is a look at what makes these investors so central.

Building on a Rich History of Socially Responsible Investing

For centuries, numerous faith traditions – including Jewish, Christian, and Muslim traditions – have applied their values to financial decisions and suggested precepts for the moral use of monetary resources. As modern financial markets developed, faith-based groups responded to the challenges of investing in accordance with their beliefs.

Quakers divested from slavery in 1758. In 1971, the Episcopal Church made history when it submitted a shareholder resolution urging General Motors to leave apartheid South Africa. Beginning in 2014, the Vatican has held conferences on impact investing and encouraged Catholics to invest in support of social and environmental goals.

Calling for Divestment from Fossil Fuels

Environmental stewardship is a value common across many faiths. Many faith-based investors have divested from fossil fuel investments due to their beliefs in environmental stewardship. In fact, faith-based investors’ embrace of fossil fuel divestment has grown in recent years, just as the strategy has taken root in the broader impact investing community—$12 trillion in assets has already been divested across all investors.

In 2017, 40 Catholic organizations announced that they would divest from fossil fuels as part of an initiative by the Global Catholic Climate Movement. The Methodist Church divested from coal and tar sand in 2015, and in 2017 its members resolved to divest from companies whose business plans conflict with the Paris Agreement goals.

In 2016, the Islamic Society of North America announced it would divest from coal, oil, and natural gas producers. Two years later, Kolot Chayeinu, a synagogue in New York, pulled its money from JPMorgan Chase to protest the bank’s funding of fossil fuel projects.

Faith-based investors have been responsible for leading the way on a number of issues and setting positive examples for the sustainable investing community.

Promoting Impact through Shareholder Engagement

Many faith-based investors have found that they can influence corporate decision-making through dialogue with companies or by proposing shareholder resolutions.

In 2017, Mercy Investment Services sponsored a shareholder resolution asking Dick’s Sporting Goods to review its gun sale policies, and the following year a group of nuns met with company executives to discuss their concerns about gun violence. This advocacy resulted in the company discontinuing sales of assault-style rifles at its Field & Stream stores and raising the minimum age for customers purchasing guns.

Shareholder engagement efforts may be especially fruitful when different faith-based organizations advocate for a common cause. Strengthening each other’s voices through partnerships like Seventh Generation Interfaith Coalition for Responsible Investment or the Interfaith Center on Corporate Responsibility has appealed to some faith-based investors, echoing the collaborative approaches adopted by other impact investors.

In the last few years, Mercy Investment Services, along with the Church Pension Fund, the Presbyterian Church, and other faith-based groups, filed shareholder resolutions with several transportation companies, asking them to establish or improve their policies on human trafficking. The Interfaith Center on Corporate Responsibility lent its support to the initiative, which was ultimately successful: the companies took steps to combat human trafficking and implemented a training program.

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