By Julie Hammerman
This summer, Catholic leaders from around the world gathered in Rome for three days to discuss the topic of “impact investing.” The conference was hosted by Catholic Relief Services and the Pontifical Council for Justice and Peace, and designed to encourage investments that serve the poor in honor of Pope Francis’ Extraordinary Year of Mercy.
As the executive director of JLens, an organization based in San Francisco that serves as the bridge between the Jewish community and the impact investing field, I was honored to be invited to speak at the Vatican Conference on Impact Investing.
Impact investing is a new term for an old concept: that values, ethics, and mission extend to investment decisions. Over the last decade, impact investing has become a global movement of individual and institutional investors that seek investments with measurable social and environmental impact in addition to financial return. The movement’s dramatic growth is due to demand from young investors, as well as the recognition that global challenges can sometimes be addressed by investment capital and business solutions in addition to philanthropy and government spending.
For four years JLens has guided Jewish institutions and community leaders in the exploration of a uniquely Jewish lens on investing. Along the way, we have reached out to many faith communities and benefited greatly from the open exchange of best practices, including the following takeaways from the Vatican conference:
- Religious leaders are relevant to impact investment discussions
In the past, religious leaders have typically not been involved in the investment process. However, impact investing requires a focus on values and mission in addition to financial return, providing religious leaders with an integral role in the investment process for faith-based institutions in particular. One of the most interesting sessions at the Vatican conference was a panel of nuns, priests and other Catholic leaders who confidently described both the financial and social return expectations of impact investments in their endowment portfolios.
- Impact investing is not “one-size-fits-all”
Faith communities share a set of values that are universal, but also adhere to a set of values that are particular to each individual community. The conference demonstrated the Catholic community’s commitment to the universal values of poverty alleviation and environmental preservation, while continuing to support more particular communal concerns of the Catholic faith, for example bioethics. Recent developments in the impact investing field, including customization and thematic offerings, enable impact investors to pursue both universal and particular values. Now individuals, communities and faith groups can better customize an investment portfolio that resonates with their unique value set.
- Faith-based investors move beyond negative screening and divestment
Negative screening and divestment were the original tactics of values-based investors and came to prominence with the 1980s South African apartheid divestment campaign. Fast forward thirty years, and the responsible investment arena has become much more sophisticated. Now the emphasis is on shareholder advocacy with corporate social responsibility teams, ESG incorporation (environmental, social, governance factors) in the investment process, thematic funds, and other positive impact tactics. While Catholic investors still often avoid certain business sectors, the theme of the conference was to expand beyond avoidance strategies to achieve greater impact. Positive impact strategies resonate more strongly in the Jewish community compared to a negative divestment approach.
- Interfaith collaborations extend to impact investing
In many forums interfaith work is of great interest and impact investing is no exception. Conference organizers were very thoughtful to include JLens to share a Jewish perspective, and the Aga Khan Foundation to share an Islamic lens on impact investing. Throughout the conference there were side discussions on potential interfaith funds and projects focused on a variety of themes, including poverty and peacebuilding.
- Impact investing is a perfect forum to engage youth in faith teachings
All faiths share a similar goal: to pass on faith tenants that are meaningful to younger generations. Impact investing is a topic that is popular with younger generations and is guided by personal and communal values, making it a perfect opportunity to explore faith-based perspectives on social, environmental, and ethical considerations. At the conference, I led a workshop that described JLens’ work in the Jewish community to bring ancient Jewish teachings to the modern context of impact investing.
Pope Francis welcomed the Catholic community’s interest in impact investing by stating, “It is important that ethics once again play its due part in the world of finance and that markets serve the interests of peoples and the common good of humanity.”
The Vatican Conference on Impact Investing was unlike any investment conference I’ve ever attended. Thoughtful conversations between investment professionals and religious leaders consumed the three days as both groups learned from each other. At JLens, we are inspired to replicate a similar convening in the Jewish community.
Julie Hammerman is the executive director of JLens. She can be reached at [email protected]