The faith-based investing eco-system can benefit greatly from lessons learned by other institutional investors that made the shift to values-aligned, responsible or impact Investing earlier. Sophie Robe and Maarten Toussaint of FIIND Impact, which has been working in the impact space for over a decade, share their thoughts.
Bottom-up demand: Pension funds received many strong signals from pensioners in favour of a shift towards responsible investments. They wanted to enjoy their pensions in a liveable world. The same call for faith-consistent investing can be heard in congregations.
Faith values, which aim to help solve global issues, have a huge overlap with the Sustainable Development Goals (SDGs). We know there is a huge SDG funding gap and not enough public money to fill it. Faith-based assets could have real impact in addressing SDG themes such as eradicating poverty, providing (equal) access to healthcare and education, zero hunger, and more. It is essential to create awareness of the issues, the financing gap, and the possible role of faith-based organisations (FBOs).
Faith groups feed around half a billion people a year. Photograph: ARC
Building community: In the case of new developments such as impact investing, investors, both small and large, experienced and less experienced, want to be able to connect and share experiences in a safe environment. Membership organisations or convening in global events provide opportunities to share knowledge, present case studies, and cement connections.
Well documented case studies of peers, especially for faith-based organisations, are essential to counter common misconceptions, honestly share lessons learned and celebrate successes.
Investing and generating returns is an art on its own. Adding an additional dimension such as faith-consistent investing requires the support of experienced financial advisors. The (legacy) financial advisors currently working for FBOs often lack experience of faith-consistent investing and need to be brought along on the journey.
Education and training: The person, people or (very rare) teams responsible for finance at FBOs sometimes lack knowledge and in many cases also lack the time and focus. Investing or managing financial advisors is usually not their day-to-day job. So they need to be trained and faith values need to be included in the Investment Policy Statements. This should become an important topic in the briefing, reviews and reports and annual statements of fiduciary intermediaries and diligently followed up and managed.
New advisors?: In some cases the legacy fiduciary intermediaries will not be able to deliver on the changed requirements, (they don't have the relevant knowledge or experience and have no capacity to identify the investable universe of faith-consistent investment products). This may mean engaging in a process to identify new or additional financial advisors and potentially change intermediaries.
Bespoke financial requirements: Every faith-based asset owner has its own bespoke financial requirements – from return requirements, short term liquidity versus long term solvency, funds required for grant making programmes, pensions, maintenance etc – which will need to honoured.
Economies of scale: There is an opportunity to gather smaller FBOs with similar portfolios and objectives in a product aligned to their values. This is to create significant economies of scale.
In conclusion: Faith-consistent investing may seem like a difficult, time-consuming task. The good news is that there is a growing network of organisations with experienced, passionate people who can support this process. Tools and processes are more widely available and, with some support, tremendous progress can be made. However, Rome was not built in a day: this process will take time.