Traditionally, many Catholic organizations engage in socially responsible investing (SRI) by utilizing negative screening to prohibit portfolio managers from investing in sin stocks or fossil fuels.
Impact investing, on the other hand, takes a positive and proactive approach. Rather than saying “I don’t want to invest in companies that support weapons or tobacco,” a Catholic investor might say, “I want to help support affordable housing or environmentally sustainable initiatives.”
Faith-based impact investing is about investing in values to empower positive results. Many impact/ESG (Environmental, Social, Governance) strategies follow the United States Conference of Catholic Bishop’s (USCCB) socially responsible investment guidelines, along with many of Pope Francis’ initiatives promoting care for creation, dignity of work, and addressing income inequality.
The USCCB, established in 2003, is a comprehensive, though equivocal, set of guidelines for Catholic Values investors to consider as part of their investment selection process. The USCCB guidelines state explicitly that in order for Catholic organizations to function and effectively carry out their mission, they depend on a reasonable return on investments and are required to operate in a fiscally sound, responsible and accountable manner. Since 2014, the Vatican has held three conferences on impact investing (2014, 2016, 2018), and the Catholic Church has become a major player in the impact/ESG space.
This biennial series of Vatican Impact Investing Conferences is a “vital, long-term global platform around Pope Francis’s vision of ‘putting the economy at the services of peoples’”. At these events, impact investing experts and Catholic leaders from around the world convene to share and evaluate financial models and investible vehicles to address systemic challenges of great importance to both the Catholic Church and the global community.
Current challenges include climate change, health, migrants and refugees, and youth unemployment. Some of these initiatives discussed at the conferences rely on using capital from Catholic organizations such as dioceses, religious orders, and health care associations to address these pivotal problems. Within the Catholic community, there has also been a significant amount of movement to divest from fossil fuels. In April 2017, more than 40 Catholic institutions marked the largest ever faith-based divestment, on the anniversary of the death of St. Francis of Assisi.
Pope Francis urged the world’s 1.2 billion Catholics and all people of good will to protect the poor and future generations by taking urgent action against the injustice of climate change and the ecological crisis. His encyclical letter Laudato Si’ is a compelling call to care for our common home, Earth, building on a long history of Catholic teaching. The divestment was advanced by the Global Catholic Climate Movement which serves the Catholic family worldwide to turn Pope Francis’ Laudato Si’ encyclical into action for climate justice. The organization was founded in 2015 and is a coalition of 650+ Catholic member organizations across all continents.When it comes to divesting, it is no surprise that faith-based organizations are leading the pack at 28% according to Fossil Fuel, a global campaign committed to a fast and just transition to 100% renewable energy for all.
There has also been a push from the Vatican to find technological solutions for three global issues the Catholic Church is addressing: social inclusion, interfaith dialogue, and assistance for migrants and refugees. In fact, the Vatican hosted its first event, VHacks, in 2018 which brought together 120 students for a 36-hour hackathon aimed at finding solutions to these three problems. In his second encyclical, Pope Francis included a chapter addressing technology’s influence and implications titled “The roots of the ecological crisis” asking the church to focus on the “dominant technocratic paradigm and the place of human beings and of human action in the world”.
Investments in technology can be a huge factor in furthering society and helping to solve many global issues facing people and communities today including those three of focus to the church. In a recent weekly Wednesday audience in St. Peter’s Square, the Holy Father called on the world’s business entrepreneurs to step up in the fight against poverty and hunger by making greater use of their creativity and business sense. There are so many ways to address the world’s problems and the Catholic Church is looking at a variety of approaches to help alleviate these issues and bring them to the spotlight – through faith-based impact investing and beyond. From divestment to social inclusion to entrepreneurship, one can see how aligning faith and finance is just scratching the surface of the positive impact it can have in making our world a better place.
http://www.viiconference.org/ https://catholicclimatemovement.global/# https://www.wired.com/story/vatican-hackathon-2018/ http://www.ncregister.com/daily-news/catholic-entrepreneurship-strives-to-follow-church-teaching-on-business https://gofossilfree.org/divestment/commitments/