ANALYSIS: FaithInvest's Director of Engagement Lorna Gold assesses what the call by Pope Francis means for the growing movement for faith-consistent investing
In a recent TED talk filmed for Countdown, a global initiative to champion ideas to address the climate crisis, the Pope invited all faiths to join him on a journey of economic transformation.
He called on everyone to play their part to transform our economy, reorientating it towards human dignity and care for our common home. Pope Francis made three concrete proposals to focus on:
a new focus on water and nutrition as basic human rights;
rapid energy transition.
The Pope offered a concise synthesis of many of the themes in his 2015 encyclical Laudato Si', as well as his new letter, Fratelli Tutti. He talked about the importance of an integral approach to tackling the pressing global problems of climate change and biodiversity loss, as well as growing inequalities and the impacts of the COVID pandemic.
Moral imperative and practical urgency
The current economic system – often focused on short-term financial gain and blind to negative impacts – was unsustainable, he said: 'We are faced with the moral imperative, and the practical urgency, to rethink many things – the way we produce; the way we consume; our culture of waste; our short-term vision; the exploitation of the poor and our indifference towards them; the growing inequalities and our dependence on harmful energy sources.'
The Pope called for creative solutions which bring the economy in line with this integral ecology. Among the solutions he suggested is for faith institutions – and the faithful in general – to re-think how they invest their money to re-align their investments in light of the current crises.
The Pope praised those faith groups, including the Catholic Divestment Movement, who have led the way on this front by divesting their resources from fossil fuel companies: 'Many organisations, Catholic and of other faiths, have already taken on the responsibility to act in this direction.'
The Pope underlined the importance of faith-based investors (and all those of good will) using a range of means to influence the actions of the corporations they are invested in.
He said: 'One way to encourage this change is to lead businesses towards the urgent need to commit themselves to the integral care of our common home, excluding from investments those companies that do not meet the parameters of integral ecology, while rewarding those that work concretely, during this transitional phase, to put, at the centre of their activities, sustainability, social justice and the promotion of the common good.'
A Papal blessing
This shift in emphasis is a significant development, underscoring the valuable work already done by many faith-based organisations such as the Interfaith Centre for Corporate Responsibility to influence corporate behaviour through shareholder action and ethical investment banks such as Triodos.
It also gives a Papal blessing to the new investor groups emerging, such as the Catholic Impact Investing Collaborative, set up to align the investments of Catholic groups to positive impact. This kind of creative approach to faith-consistent investing is starting to emerge as potential gamechanger given the scale and scope of the faiths as asset owners with a values mandate.
The Pope’s words come as a great encouragement to those just setting out on this journey, such as FaithInvest. FaithInvest was set up in 2019 specifically with the mandate of supporting all faiths to recognise the connection between their faith-mission and their investments.
The first year of operation has shone a light on the need for collaboration to overcome the many practical barriers that prevent a more integral approach to investing for positive impact. As Pope Francis rightly says, the urgency of our current situation requires a new level of creativity – and of working together to find solutions. In this transition, there is a huge value in coming together as communities of practice to share ideas, solutions and practical ways to invest for a positive impact.
As Pope Francis said: 'Our conscience tells us that we cannot remain indifferent to the suffering of those in need, to the growing economic inequalities and social injustices. And that the economy itself cannot be limited to production and distribution. It must also consider its impacts on both the environment and on the dignity of people. We could say that the economy should be creative in itself and in its methods, in the way it acts.'