An initiative to serve the needs of asset owners wishing to invest according to Christian values has been launched following a landmark gathering of investment and Christian leaders in London last month.
The aim is to drive a new market for Christian faith consistent investing (FCI).
According to Pew Research, around 2.3 billion people – 30% of the world’s population – are Christians.
“The Christian community is a very significant part of the world’s population, and a rough estimate puts the capital invested by Christians at around $1.75trn,” said Peter Hugh Smith, chief executive officer of CCLA Investment Management, the specialist asset manager for charities, faith and local authority investors.
“In the UK, CCLA is seeing increasing interest from all [Christian] denominations in how money is invested, aligned with specific ethics. So the aim is to help Christians think about investing their money in a way which is aligned with Christian, or Roman Catholic, teaching. It’s about focusing on values rather than value,” he added.
Last month’s meeting – the Mensuram Bonam [good measure] summit – was organised by Jean-Baptiste de Franssu, the president of the Vatican Bank, and attended by 90 financial sector leaders and church leaders from 16 countries, all of whom oversee significant investment portfolios.
Many FCI funds already exist, but the main aim of the initiative is to identify them for investors.
“The development of this market remains far too modest, with limited diversity of offerings,” said de Franssu, before last month’s meeting. “That’s why we’re bringing together the entire ecosystem – from index and data providers to investment advisers, proxy voting specialists and fund performance management organisations. A key focus will be creating a greater consistency of approach and a clearer definition and classification of products.”
Representatives of Protestant churches also attended the conference to share their experience of embedding FCI in their portfolios.
Mensuram Bonam (MB) is a document published in 2022 by the Vatican Pontifical Academy of Social Sciences, designed to encourage investment policies which serve the common good, and respect justice and ethical standards. It set out guidelines but not rules.
Many investors might assume that ESG principles – with their emphasis on protecting the planet and promoting human rights – are themselves based on Christian values.
But according to Hugh Smith, there are divergences between ESG and the requirements of FCI, and in particular, of the Catholic Church.
For instance, while mainstream institutional investors often steer clear of the oil and gas industry, the Church’s emphasis on human dignity means that if this industry is part of a community’s livelihood, then Catholic investors will not necessarily avoid those companies engaged in it.
“ESG is a non-faith-based driver, and it has got very political”
Peter Hugh Smith, CCLA Investment Management
In contrast, many pharmaceutical companies now carry out stem cell research involving the destruction of human embryos, which the Church opposes, so these companies would be avoided by its investors.
“ESG is a non-faith-based driver, and it has got very political,” said Hugh Smith. “FCI cannot be accused of being woke.”
But given the multiplicity of non-Catholic denominations with more liberal values using FCI principles, Hugh Smith agrees that any rules which the group formulates cannot be of the “one-size-fits-all” variety but instead use the MB-principled approach of engage, enhance, exclude.
A number of working groups, including specialist asset managers, are now examining the concept to come up with concrete steps towards developing the FCI market, intended to come onstream within the next couple of years. Innovations will include:
- an MB market index created by Bloomberg Index Services;
- a non-profit consortium to guide Catholic investors globally on proxy voting and engagement;
- a project to identify Christian investment funds and investigate the creation of fund sectors for Christian/Catholic investors.
“I’m very hopeful it will take off,” said Hugh Smith. “I think it’s really important, and that it will become a natural component of financial investment going forward,” he added.
A reflection of growing interest in FCI was the announcement last month of a guide for asset owners on working with investment managers by the Church Investors Group, representing predominantly church investors in the UK and Ireland.
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