Tag: Impact Investing

The ethics of Biblically Responsible Investing (BRI) are not new. In fact, they can be traced not only to specific Bible verses but also to Jewish interpretive writing in the Talmud stretching back before Christ.

For example, the great Middle Ages Rabbi Maimonides (1135-1204 A.D.) forbade “the sale of weapons to people who may use them for violence or robbery (Mishnah Torah, Laws of Murder 12:12, 14).” And Rabbi Dr. Asher Meier of the Business Ethics Center of Jerusalem confirms that Jewish tradition requires an ethical approach to investing: “Any economic activity that has special social value can be considered a preferred investment,” he wrote.

Christians also had guidance hundreds of years ago in how to handle the resources with which God had blessed them. In 1524, Christian reformer Martin Luther excoriated businesspeople who left out ethics: “I shall sell my wares as dear as I can … But it means making room for greed and opening the door and window of hell … so long as I have my profit and satisfy my greed, of what concern is it to me if it injures my neighbor in ten ways at once? So you see how this motto goes so straight and shamelessly against not only Christian love but also natural law as well.”

John Wesley, the founder of the Methodist movement, “urged his followers to shun profiting at the expense of their neighbors. Consequently, they avoided partnering or investing with those who earned their money through alcohol, tobacco, weapons or gambling—essentially establishing social investment screens,” wrote William Donovan in The Balance.com.

Ratcheting forward to 1928, Philip Carret launched the Fidelity Mutual Trust, which became the Pioneer Fund, one of the first-ever mutual funds. Designed initially to serve church investors, the Fund had a policy of “screening investments on ethical grounds,” rejecting companies that traded in alcohol or tobacco. With Carret’s guidance, the Fund survived the 1929 Stock Market Crash and the Great Depression and went on to become one of the largest mutual funds.

In January 1994, MMA Praxis Intermediate fund, was launched designed with Mennonite beliefs, sought companies that support positive values such as the respect for human dignity, responsible management and environmental stewardship, while avoiding industries and activities like gambling, alcohol and tobacco production and military contracting.

With the rising number of “responsible” funds, however, there wasn’t really an option for Christian conservatives or pastors to invest without compromising their beliefs, including the sanctity of life and wholesome family values. In March 1994, under Art Ally’s leadership, the Timothy Plan unveiled its fund aimed at evangelical Christians.

Secular investment firms weren’t thrilled by the arrival of Timothy Plan’s Biblically Responsible Investments. In fact, mutual fund analyst Michael Lipper told Bloomberg News for a 1994 article titled “New Fund Seeks Christians:” “This fund may have gone too far. It sounds like someone trying to preach to the converted and then setting up a big collection.”

Time has proven Mr. Ally right. The Timothy Plan is one of over a dozen successful BRI-based mutual funds now available. Currently, Timothy Plan has over $1 billion of assets under management.

The basis of each of these funds is the Bible, which clearly states that all things belong to God, including each of us and everything we own. Genesis 1 through 3 tells us that God created all things for His own glory and that human beings have the honor of being at the very top of his creative order.

Since the beginning, God has given humanity the great gift of dominance over all living things, but also a responsibility to be good stewards of His creation. Therefore, we owe it to our Maker to use our money wisely. We should do nothing to hinder His Kingdom and instead advance it. We should not invest in ventures that promote or traffic in sin and thus are destructive to people.

Answering this charge, hundreds of thousands of Christians work to ensure that their finances honor God. For those committed to Biblically Responsible Investing (BRI), it is of upmost importance to honor God by aligning their investments with their values.

But does this mean sacrificing their return on investment? Possibly not. In fact, a considerable body of research indicates that investors do not have to compromise their bottom lines while engaging in BRI and may even reap higher returns in some cases.

A 2016 study called “Great Expectations: Mission Preservation and Financial Performance in Impact Investing” from the University of Pennsylvania’s Wharton School of Business found that screened investments performed favorably against unscreened investment funds: “Impact funds in the sample that seek market-rate-returns demonstrate that they can achieve results comparable to market indices, while still reporting mission preservation in the vast majority of their exited investments.”

However, an Oxford University 18-year study of screened funds comprising 180 U.S. companies for “sustainability” and other factors, such as excluding firms that employed child labor, showed better returns, including lower cost of capital and “stock price performance.” The authors compiled evidence “that High Sustainability companies significantly outperform their counterparts over the long term, both in terms of stock market as well as accounting.”

In 2015, a Christian Investment Forum study noted that previous studies had established that Socially Responsible Investing (SRI), of which BRI is a subcategory, performed as well or better than unscreened funds.

In an effort to determine whether the smaller universe of BRI funds matched the overall SRI finding, the authors concluded that, “Based on the analysis of historical performance data from the funds managed by members of the Christian Investment Forum [of which Timothy Plan is a participant], the results did corroborate the expectation that return performance was not reduced due to incorporating BRI, and in fact, there was a general outperformance compared to the industry averages,” the study found. “Over the last five years, a composite of the returns from all of the equity mutual funds within the Christian Investment Forum outperformed the industry average by 77 basis points on an annualized basis.”

The author cautioned that “the results of this analysis are not meant to suggest that BRI funds will result in outperformance. The most important reason to incorporate BRI funds into an overall investment portfolio is to better align investments with an investor’s values.” But investors and advisors can have peace of mind that “considering funds that can align with their Christian faith need not be a choice between values and performance.”

In short, investors who want to honor God with their God-given resources should not fear the unknown when it comes to comparable returns. After all, as the Bible tells God’s followers in I Samuel 2:30, “Those who honor me I will honor, but those who despise me will be disdained” (NIV).

Article by Robert Knight, an author and the Communications Adviser for Timothy Partners, Ltd., distributor of Timothy Plan funds (https://timothyplan.com). Since 1994, Timothy Plan has been a beacon for Godly stewardship in the financial community. The first of its kind, Timothy Plan is a family of mutual funds that screens Funds to ensure that no money is invested in companies that are supportive of ideals that are contrary to their biblical, moral imperative.

Mutual funds are available through a prospectus by contacting the fund or your financial professional. If you are considering a mutual fund you should always carefully read the prospectus before investing to analyze the investment objectives, risks, charges and expenses.

Finding a Shared Vision for Values-Driven Investors

The phrase “What would Jesus do?” or “WWJD” emerged in American consciousness during the 1990s as motto for many Christians seeking to regularly reflect on how the moral teachings of Jesus could be reflected in their daily lives. As is the way of our modern culture, the reflective purpose of this cue soon became obscured by our collective passion for marketing and merchandise in all its many forms.

Whether one participates in organized religion or not, the idea of finding a mechanism that calls us to step outside of our personal situation to view things from a different, morally-grounded perspective can have many benefits. This was the original intention of WWJD.

This also appears to be the intention of many of the parables shared by Jesus throughout the New Testament. He is frequently presented responding to critical—even tricky—questions with stories that cause reflection, rather than answers that reflect or refine the religio-political rules of the day, as most expected. These parables were all the more disruptive by their inclusion of persons—women, children, tax collectors, slaves, etc.—in roles and situations that challenged the status quo and current thinking on what was “good” and “right.” The parables seemed designed to pull listeners out of their presuppositions and self-assuredness.

So what does all of this have to do with how we, as people of faith or good will, approach investing? And more importantly, how do we do this when we may not all agree on how it is to be done?

Both less and more than you might think!

Less, because the Parables and many similar religious teachings are not necessarily about “how to do” something, but more often about “how to be” in a situation. These stories challenge certainty about rules, righteous action, and our place in the world with a focus on right relationships–between people, classes, ethnic/racial groups, genders and with Creation itself. And it is this centrality of relationships that makes such teachings more relevant to the increasingly contentious and conflicted environment in which many values-based investors find themselves.

One parable that seems particularly relevant to the current SRI investment arena is that of the Good Samaritan. What is both ironic and even more timely is that this parable was offered in response to a question posed to Jesus asking, “And who is my neighbor”? It is a question of inclusion and value that echoes with importance through the centuries to America’s reality today.

Found in Luke 10:25-37 [1], this story—at least in its simplest form—has practically become baked into American culture. In short, the Samaritan (from an ethnic group often looked down upon by the dominant culture Jesus was a part of) stopped to help a man wounded by robbers while two religious leaders (a priest and a Levite) passed him by, presumably not stopping because touching the wounded man would have made them unclean according to the religious rules of the day.

When Jesus flipped the question to questioner, asking “Which of these three…was a neighbor to the man who fell into the hands of the robbers?”, the answer was “The one who showed him mercy.” One can easily replace any of these characters with modern stand-ins (and people have!) and get a similar reflective opportunity. The point is to step out of what we think we know and ask how our “answers” fit in a broader, moral frame—particularly when that challenges our current world view and objectives.

What then might we learn, applying reflection from the story of the Good Samaritan, to our collective work in faith-based, SRI/ESG investing? Here are my takeaways:

Relationships matter—For me, this is the overarching message of this Parable (and many others). Understanding the human component, motivations, objectives and needs in any situation—especially one of conflict—is critical. How can we first see what we share, not where contrast? No strategy, marketing opportunity, or clever taking of the intellectual high-ground is worth sacrificing community and collaboration in your wake. Being “right” (often a less certain thing than we think at the time anyway) should not preclude being in right relationships with those around us—even those we think are in opposition to us.

Remember the shared goal—One reason why relationships should and do matter, is that we often have shared goals, whether we choose to focus on them or not. It is unlikely the religious leaders thought the wounded man should die. Rather they chose to place their own rules and priorities above the shared goal—mandated by religious teachings–of caring for those in need. In the end, we all need to decide if it is the path or the goal that is more important.

The work is often messy—The issue of “purity” or remaining “clean” runs deep in the Good Samaritan Parable. This theme seems to echo within both the faith-based and SRI investment world as well today. While an important—and potentially valid–point of values reflection, avoidance rarely brings the solutions we want and need. Getting to our shared goal demands the ability to engage, understand, challenge, and compromise (practically a four-letter word in our current culture) with those of a different perspective. Whether corporation, investor or activist (or combinations thereof), achieving justice and sustainability has nearly always been messy.

There may be a cost—The Samaritan invested his own time and resources in caring for the wounded man, in both the short and long term. The Holy Grail of SRI—and particularly ESG—has been to prove that one can do demonstrable good for the world and deliver competition-topping performance. Incredible strides have been made, materiality demonstrated, and successful claims put forward. Yet in many cases there remain a number of asterisks, requiring a fuller look at the details to understand the complete picture. Perhaps the more important point to consider—whether approaching the investment task on behalf of the environment or a set of faith-driven values—is how much cost is too much and is the cost worth it in the end.

Being “wise” (or smart or clever or right) doesn’t trump mercy—In a culture and communication environment dominated by selective information, passion-driven marketing campaigns, and the need to find enemies/opponents, the question our community (really any community) increasingly faces is whether or not to engage in the popular “wisdom” of the marketplace or stick to the values that unite us. It is a hard choice to make with friends and competitors alike chanting “fight fire with fire.” And it is one we must all choose for ourselves.

In the end, the value of a moral reflective cue—like “What would the Good Samaritan do?”—is to cause us to stop and think about how our situation and related actions look from a different perspective, or in the context of diverse values that we claim to support. It wouldn’t surprise me if no two people respond to my own reflections in exactly the same way. I think that’s the point of parables anyway. All I can do is repeat Jesus’ suggestion—“Go and do likewise.”

Article by Mark A. Regier, Vice President of Stewardship Investing for Praxis Mutual Funds and Everence Financial (https://www.praxismutualfunds.com), a leading provider of faith-based financial products in the United States and a ministry of Mennonite Church USA. Mark has been involved in the field of ethical and socially responsible investing at Everence for more than 20 years. He oversees the company’s work in socially responsible investing (including investment screening, ESG integration, proxy voting, corporate engagement and community investing). In addition, Mark works with products and programs throughout Everence to strengthen their creative integration of faith and finances. In 2015, Mark assumed leadership of the sales and marketing efforts for the Praxis Mutual Funds.

Mark has served as a member of the Board of Directors for the US Social Investment Forum, the Interfaith Center on Corporate Responsibility, Partners for the Common Good, the International Working Group (USSIF), The Isaiah Fund for Disaster Recovery Investing, and the Highland-Good Steward SRI hedge fund. In 2006, Mark received the SRI Service Award, the US social investment industry’s highest honor.

With over 25 years of service to the church and a background in ethics and theological studies, Mark is often a resource to national and international media and organizations on faith-based and community investing issues.

[1] Luke 10:25-37

https://www.biblegateway.com/passage/?search=Luke+10%3A25-37&version=NRSV