New report: Faith institutions find responsible investment difficult

New research has revealed that religious institutions find it difficult to invest responsibly whilst maintaining a strategy that fits in with their beliefs.

Despite the fact that faith institutions are widely considered to be the pioneers of responsible investment and make up the third largest demographic of investors globally, it appears that the stock market presents difficulties when it comes to aligning the needs of the faith with a responsible investment strategy.

The research was published this month by the International Interfaith Investment Group (3iG) - which ARC helped create - along with ESADE Business School in Spain and Vlerick Leuven Gent Management School in Belgium.

Katinka van Cranenburgh of 3iG, who carried out the research along with Professor Celine Louche from Vlerick and Professor Daniel Arenas of ESADE, says that religious investors are not always looking to the bottom‐line when deciding where to put their money.

“We found that faith institutions go beyond the financial aspects of investing. They are more driven by the impact they can have on company behaviour or society than by the financial returns. They tend to have a preference for investing in projects or companies that do good, rather than simply adopting “best in class approaches”.

However, this approach is made more difficult by the fact that banks often cannot provide the services required to be consistent with faith‐conscious investing.

“Faith institutions cannot implement faith‐consistent investing alone; they depend on the offerings of financial institutions. The current investment market is not capable of providing all the tools and services that are required by religious investors” says Louche.

“The great majority of religious institutions surveyed said that their religious beliefs are reflected in their investment practices, but 51% say they would invest more if there were reliable tools to do so in accordance with their beliefs.”

The research did conclude a possible solution for this: customised religious investment products.

Link here for the full press release.