Katinka C van Cranenburgh is visiting scholar at ESADE and secretary general of the International Interfaith Investment Group 3iG, which conducts research among religious organisations in partnership with business schools and universities.
Religious organisations’ core business is ethics. Therefore, one might expect that the investment portfolios of these organisations would not be in contradiction with their ethics. Unfortunately, practice is different from reality. Twentieth century research shows a secular-sacred divide between (secular) investments and (holy) missions. But with the rise of CSR things are changing. Recent research from the ESADE Institute for Social Innovation, in cooperation with 3iG, the International Interfaith Investment Group, and Audencia School of Management, shows that faith groups, rich and poor, can be a force for change in business. That is, if the religious are willing to utilise their power as investors.
Religious groups’ charitable and philanthropic activities are often impressive. But what if the donations are being made in parallel with investments that bring harm to exactly the people these groups are trying to help. Investing in corporations affects people’s lives. Investments will have an effect on climate, land, water, poverty, equality, justice and peace, indeed on most religious themes.
The study shows that it is possible to manage investment in line with religious beliefs and to hit profit targets. It reveals that religious investors have a head-start on secular responsible investors because of key characteristics related to their religious nature. Religious scriptures are available to guide the investment policy and portfolio decision-making. The religious belief systems provide a consistent and long-term oriented investment mind-set. The grassroots networks, or believers/followers are helpful in terms of signalling issues around the world where corporations have business or supply chain activities. Input from for example community members working on sugar plantations in Ecuador feed financial shareholder activists active on the stock exchange in their discussions with the soft drink company.
Grass root networks can also be helpful in supporting social shareholder engagement of religious organisations by boycotting products whilst the engagement is ongoing.
Religious organisations operating together though Religious Investor Groups have the power to impact business behaviour in such way that the companies they invest in are behaving more in line with their religious beliefs. At the same time, the investments provide the financial return on investment that religious organisations need for survival.
Religion-based groups see it as their responsibility to help vulnerable populations. With the greying of religious staff and the need for religious organisations to maintain their personnel and serve their grassroots, the religious increasingly rely on their investments in capital markets. What they used to do with their hands, they can now do with their money. By investing in a faith-consistent way, they can pursue justice, care of the environment and integrity. They can be powerful players in capital markets, through their financial tools they can practise their stewardship.
Read the full study.