Beyond Investment: Guidance for Enhancing FCI for Smaller Faith-Based Asset Owners

In the first article of this two-part series, we provided guidance to help small faith-based asset owners (FBAOs) begin their faith-consistent investing (FCI) journey, focusing specifically on identifying and selecting investment strategies that reflect their core values. 

Researching and selecting mutual funds and ETFs that align with a FBAO’s core values is a key milestone in developing a comprehensive FCI program. As discussed in detail in FaithInvest’s 2023 Faith-Consistent Investing and Smaller Organisations paper, despite their smaller size and the accompanying challenges, there are many additional steps that small FBAOs can take to enhance their approach. This article aims to outline these steps to assist small FBAOs in effectively advancing their FCI journey. 

Building on a Foundation of Faith-Aligned Investments 

Selecting faith-aligned funds is a significant achievement, creating a solid foundation for FCI. However, many small FBAOs wish to go further and become active participants in promoting positive change through their investments. A common challenge that arises, however, is that due to their smaller size (in terms of assets managed) these FBAOs have limited influence on the asset managers of the mutual funds and ETFs in which they have invested. To more effectively engage with and influence these asset managers, small FBAOs can consider the following actions: 

• Establish Ongoing, Open Lines of Communication: Regularly scheduled calls or meetings with the fund’s client service representative can provide an opportunity to discuss how well the fund’s practices align with a FBAO’s values and expectations. During these interactions, the FBAO can express concerns, seek updates on responsible investing efforts, and advocate for more faith-aligned approaches. 

• Implement Annual Questionnaires: Administer annual questionnaires to gain a better understanding of the fund manager’s processes, practices, sustainability policies, and management of ESG issues. These questionnaires can help uncover valuable information about how funds align with a FBAO’s values and identify areas where further refinement is needed. This process not only enhances transparency but also signals to asset managers that sustainable investing and faith-based considerations are priorities for the FBAO. 

• Participate in Collective Action: Join forces with other faith-based investors who share similar values to significantly increase influence. Seek out networks of faith-based investors, such as the Interfaith Center on Corporate Responsibility (ICCR), to amplify your voice and collectively advocate for change.  

• Enhance Shareholder Engagement: As investors, FBAOs have the right to engage with companies on issues of concern. Direct engagement, however, often requires staff, experience, and time that many small FBAOs may not have. To address this challenge, small FBAOs can write letters instead of speaking with/meeting company management directly and/or can sign letters written by advocacy groups (such as US SIF). Attending shareholder meetings and voting proxies in a way that promotes responsible corporate behavior that aligns with a FBAO’s core values is also a key part of an effective engagement strategy. To assist in the process, small FBAOs can leverage publicly available proxy voting guidelines from larger, faith-based asset owners, such as Wespath’s, or utilize third party proxy voting services, such as Glass Lewis and ISS.  

  
  

Implementing and advancing an organization’s FCI efforts can feel daunting, but it shouldn’t be! Each of these steps builds upon the other and adds clarity to the process of aligning a FBAO’s financial objectives with their spiritual mission. We recognize, however, that each of these steps requires time, resources, and experience that small FBAOs often do not have. In these cases, leveraging the expertise and services of organizations like FaithInvest can prove valuable in effectively advancing a FBAO’s FCI program. For example, FaithInvest can provide guidance and resources to further develop effective advocacy strategies, engage with asset managers, create and manage asset manager questionnaires, and provide many additional services that help ensure a FBAOs investments align with their faith and fiduciary objectives.  

By leveraging these tools and steps, even small investors with limited resources can make meaningful contributions that help accelerate the transition to a more sustainable and inclusive future that honors their faith-driven principles. 

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Disclaimer

FaithInvest is an international nonprofit organisation that empowers faith groups to invest in line with their beliefs and values. FaithInvest is not authorised by the Financial Conduct Authority and does not provide financial or investment advice. Information provided on FaithInvest’s website or its other communication channels does not constitute financial or investment advice. If you wish to receive any form of financial or investment advice, please consult a qualified and independent financial advisor. You should conduct your own due diligence in relation to any investment opportunities or strategies you choose to pursue. FaithInvest does not promote any specific investments or opportunities and cannot therefore accept responsibility for any specific financial or investment decisions you make following participation on its website platform.