The growing focus on faith-based investing – also known as faith-consistent investing (FCI) – saw assets in faith-based exchange-traded and mutual funds hit $100 billion for the first time last year, jumping by 14% in the 15 months leading up to June 2024, according to a survey by faith-based investment advisory Brightlight.
And in September this year, there was excitement around the launch of a new S&P 500 Christian Values Screened Index by Bountiful Financial and S&P Dow Jones, which ‘strives to adhere to expressions of Christian values while maintaining institutional rigour’.
While there are debates around exactly whose values the Index represents (given that Christians comprise a diverse multitude globally), its introduction is a further sign of what previous studies have shown – that, when asked, people want their deeply held convictions to be reflected in how their money is invested.
A significant change in attitudes
Global non-profit FaithInvest has also seen ‘a significant change in attitudes’ towards faith-based investing since it was founded in 2019,’ says FaithInvest Executive Chair Dave Zellner: ‘Many more faith organisations are talking about the importance of investing in line with their values, and investment providers are taking notice.’
However, adopting faith-consistent investing policies and practices can be daunting, especially for smaller or mid-sized religious organisations which often lack in-house investment knowledge or expertise. These groups usually rely on external financial intermediaries to manage their investments, and often lack confidence when it comes to introducing significant changes to their investment policies.
In addition, there is no one size fits all. Each faith has its own unique set of core values, governance structures, staff, capabilities, goals, etc, which often makes the development and management of a comprehensive FCI approach seem a challenging task.
‘Faith organisations want to achieve transformative social and environmental impact with their investments,’ says Zellner, who previously oversaw the management of more than US$25 billion in assets on behalf of over 100,000 participants and 150 United Methodist institutions.
‘But they also have a legal responsibility to manage their financial assets carefully.’ As a result, the often-asked question we get from faith-based asset owners is: ‘How do we honour both our deeply held beliefs AND our fiduciary duty to prudently manage our assets?’
That’s why non-profit FaithInvest has released a comprehensive new guide to support faith-based organisations to do just that. From Faith Values to Investment: A Guide to Faith-Consistent Investment Policy and Guidelines draws on our experience of supporting faith-based organisations on FCI over the last six years, and has been significantly updated and expanded since we published our first guide in 2021.
At 40 pages, the new guide is double the size of the 2021 version and provides what Zellner calls a ‘very actionable road map for faith-based investors’. It covers key practicalities by:
• Providing an overview of the fundamentals of FCI;
• Outlining critical steps faith organisations should take to establish and manage a comprehensive FCI programme, including governance structures;
• Providing a comprehensive resource for individuals in roles overseeing faith-based assets, such as senior faith management, staff responsible for administering investment programmes, trustees and ethics committee members.
As well as in-depth guidance on how to discern and document faith values – an essential first step in any FCI investment policy – it also includes four case studies from a variety of faith traditions to provide real world examples of leading FCI programmes and how they have applied their beliefs, teachings and values to their investment practices.
Starting from Faith values
Before a faith-based organisation can closely reflect its values into its investment policies and decisions, it must first undertake the critical and collaborative work of identifying and codifying those values.
This process calls for careful discernment, inclusive and participatory dialogue, and thoughtful engagement with the wisdom and insights of the faith tradition, ensuring that identified values are rooted in shared beliefs, community input, and moral integrity.
This process cannot be rushed and is vital to the development of the faith-consistent investment policy and guidelines. But faith organisations have two advantages that secular organisations do not. First, they have a wealth of scriptural and theological texts and teachings on guiding principles (such as care for creation, dignity of every person, and faithful stewardship) – that provide a moral framework for investment.
And, second, they can often take a long-term, holistic perspective that considers systemic risks and opportunities, says Zellner. In this way FCI can not only align with faith investors’ values but also potentially enhance long-term financial performance.
Applying Faith values in practice
How do faith groups integrate their values into their investment policies? The guide has four case studies from Christian, Muslim and Buddhist faith organisations.
For example, in the Islamic tradition, the Maqasid Al-Shariah Guidance document produced by the Malaysian Securities Commission integrates several key tenets of Islam to investment practices. These include Adl (justice) – equitable distribution and fair treatment for all – and Ihsan (benevolence), which refers to going beyond what is required to act in a good and compassionate manner.
By linking these broad concepts to specific investment themes, the guide provides a tangible way to translate faith into action: Muslim faith-based asset owners are called on to prioritise investments that promote fair distribution, ethical and sustainable practices and the preservation of resources for future generations, thereby ensuring investments are financially, morally and religiously sound.
Another of case study looks at how the UK-based English Sangha Trust (EST) expresses its Buddhist values in its investment policy. The EST is inspired by the Thai Forest Tradition of Theravada Buddhism, which emphasises reverence for nature, and draws on key Buddhist teachings such as the Noble Eightfold Path, which outlines the path to enlightenment; and the Five Precepts, which offer a practical ethical framework for daily life.
With this foundation, the EST created ethical investment guidelines that reflect these principles. For example, the tenet of Ahimsa (non-harming) ties to the principle of avoiding harm to all living beings, both intentionally and unintentionally, and thus to the exclusion of companies involved in manufacturing of weapons, tobacco, or alcohol.
The importance of “front door” language
The investment policy and guidelines are the foundational governing documents that define how a faith’s investable assets should be deployed. As From Faith Values to Investment suggests, the investment policy should be considered as a compass ‘to ensure an organisation’s investment portfolio stays on course to meet its specified goals, even during times of market turmoil’.
Integrating faith values into these two documents is the first step in developing a faith-consistent investing (FCI) approach. Yet all too often, we have found that values are poorly expressed, lack clear investable guidance for asset managers to follow or, worse (especially in older policies), are barely mentioned at all.
FaithInvest strongly encourages well-documented ‘front door’ language in the form of an upfront ‘responsible investment statement’ or similarly titled declaration on the front end of the investment policy – how will key beliefs, teachings, and values manifest themselves in our investments? ‘Strong, clear language around this is of vital importance because it’s the anchor for everything else that follows,’ says Zellner.
Going beyond exclusions
Excluding morally or ethically objectionable companies is a common starting point of FCI for many faith organisations (as is the related concept of ‘tilting’ toward companies that do align with the faith’s values). However, we believe that simply avoiding harm is not sufficient to achieve the positive impact that many faith organisations wish to see.
To that end, the guide discusses options for going further, such as pursuing outcome-driven investing, i.e., investing in solutions to critical environmental or social challenges. One example is impact investing where investments are made with the specific intention to generate positive, measurable environmental or social impact in addition to producing a suitable financial return.
As more faith organisations make progress along their FCI journey, it is precisely these kinds of investments that are increasingly seen as one of the most powerful ways faiths can directly address global challenges such as climate change, poverty, inequality, and access to essential services.
Regular review
While the investment policy and guidelines serve as the moral and operational compass for a faith organisation’s investments, it is important to review them regularly.
‘At FaithInvest, we often describe an investment policy as a living document,’ says FaithInvest’s Catherine Devitt. ‘This means it is not a static, one-time statement of principles but a framework that should evolve as a faith organisation’s understanding of faith, mission and stewardship deepens, and its capacity to achieve greater faith-alignment expands.’
‘A ‘living’ policy adapts to new theological insights, new ethical challenges, and new market realities – whether that means incorporating denominational guidance on climate stewardship, addressing emerging social concerns, or integrating updated positive or negative screening tools from your asset managers.’
Taking the initial step
The From Faith Values to Investment guide provides a practical resource that encourages faiths to take steps toward FCI, even if those steps seem daunting at first, or very small. As Zellner stresses: ‘Every dollar aligned with faith values becomes a force for positive change. This combination of values, financial influence, and institutional independence positions faith organisations to lead in shaping a more just, sustainable, and values-driven economy.’
Article by Susie Weldon, Director of Communications at FaithInvest, an international, not-for-profit network serving religious groups and faith-based institutional investors. Prior to joining FaithInvest, she was an award-winning journalist for two decades, working in the UK and Hong Kong, before moving into international development where she specialised in working with faith groups on environmental issues. She headed the Alliance of Religions and Conservation’s Faith in Food programme, helping to train hundreds of Christian and Muslim farmers in East Africa in sustainable farming methods. She later co-founded the UK charity Faith in Water which worked with Ugandan faith-managed schools on water and sanitation, particularly girls’ menstrual health. She is co-author of Faith in Food: Changing the world one meal at a time. and a trustee of Sustainable Food Somerset. She is based in the UK.
