Aligning capital with moral values holds immense potential to help the world achieve the Sustainable Development Goals and fight climate change. Hann Verheijen, Managing Director at Cordaid Investment Management, discussed challenges and opportunities for raising the level of faith-based impact investing at the Oxford Faith-Aligned Impact Finance project (OxFAIF) conference on November 20th.
Faith-based investors represent the fourth largest investor force in the world. We expect faith to be leading the way and practice what they preach. “For where your treasure is, your heart will be also,” says the Bible. However, the scale of faith-based impact investing is still small and enormous potential for transformational social impact remains unlocked.
“The impact investing industry has grown from something exotic to an almost mainstream activity nowadays, and yet many faith-based investors need to be reminded that money is supposed to serve society and nature. Faith-based organisations have values and good intentions, but something is missing. Why do faith-based organisations do so much of the magnificent charity work but seem to put little thought into investing their assets? At the OxFAIF, we discussed the reasons that are holding these organisations back and how to guide them towards investing in impact,” says Hann.
Most religious organisations have a thing in common: almost a desire to look away when dealing with their financial assets. It’s common to outsource the management of assets and look the other way. This ambiguity about investment money leads to unfortunate results: a disproportionally small amount of time is dedicated to managing billions. Consequently, some of the money is invested in corporations and industries with dubious benefits for society. So how do we make faith-based investors align values and pockets?
All OxFAIF’s panellists agreed: there is the need to change how money operates within the faith-based investors’ ecosystem. We have seen a massive trend in large financial institutions to invest differently for the greater good. It is time for religiously and spiritually driven investors to join the movement and perhaps even lead the way. All the ingredients are there. What we need is to start a dialogue between the world of finance and religion.
As discussed at the convening, faith-based investors have not partially accelerated in the impact field because they lack the necessary technical expertise within their organisations. Investing for impact is often more elaborate, requiring broader due diligence than donating money to charities. Mainstream investment firms, on the other hand, rarely look beyond risks and returns. The two worlds don’t speak the same language. And it’s about time we start learning.
The Faith-Based Investors Hub, launched by GIIN over a year ago, provides a platform where professional investors and philanthropists can find common ground on how to achieve impact goals. Investors show how to translate values into impact targets and concrete outcomes. Religious organisations involved in the life of fragile communities can provide insights into vulnerable populations’ needs.
That’s why the partnership between Cordaid Foundation and Cordaid Investment Management is so synergetic: religious values convert into meaningful investments to overcome fragility. Cordaid Investment Management’s activities draw on the expertise and presence of our Cordaid colleagues in those challenging environments. “Our partnership with Cordaid proves that the traditional investment industry can successfully merge with the faith-based investors. Yes, it requires the two worlds to think and do things differently, having people of diverse backgrounds at the decision-making table. We are enjoying this inspirational dialogue and encourage other faith organisations to join us,” concludes Hann.