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Introduction to Zug FCI guidelines

Introduction to Zug FCI guidelines

Download your copy of the full Guidelines.

By Martin Palmer

The story of the relationship between faith and finance is as old as the story of the world’s faiths. The tension between guiding the faithful towards a more spiritual life in the midst of material temptation is one which has both guided and bedevilled the great faiths for millennia. The simple fact is that as the faiths grew, they became important providers of education, of health, of welfare and of compassion. They have needed to find, and store up, finance to support their sacred buildings, their clergy, their lay staff, their publications and their social care responsibilities.

In ARC we always talk about two aspects of the impact of the faiths that are relevant for environmental and development issues.

First there is the Wisdom of religions. Each faith has centuries of experience of working with peculiarities of human behaviour within the context of a greater vision of the meaning and significance of life. Faiths have built up vast store of wisdom, in many cases believed to be a gift from God or the gods, but often also through dealing with people and communities through times of deep distress, great joy and simple ordinariness.

Secondly, there is the Business of religions. The faiths own about 8% of the habitable land surface – about 5% of all commercial forests are owned by faiths. They run, manage or founded around half of all schools worldwide – 64% in Sub-Saharan Africa according to UNICEF. They have more TV and radio stations between them than the whole of the EU and produce more books, newspapers and journals than any other network. They also own an estimated 10% of the world’s total financial investment. The Business of religion involves managing these assets and through the investments and ownership of businesses, raising the funds necessary to support their medical, educational, organisational and social care responsibilities.

If we (whether we think of ourselves as living within or outside religious structures) are to understand the social, environmental and sustainable development role the faiths can play, it is vital to consider both these aspects. Simply focusing on the wisdom without appreciating the business dimension is to produce a lopsided view. To only concentrate on the business without understanding the beliefs and values which motivate it, is to miss the point of why the faiths are potentially so vital to planning environmental and sustainable development around the world.

These Guidelines take you into what the faiths own (where that is possible to be detailed) and into what their priorities are for future investment in environmental and sustainable development. But they also all look at core values. Without understanding what motivates Buddhists based on the Buddha’s teachings; what inspires Hindus from the sacred book Bhagavad-gita; why the Methodists of the UK find inspiration in their founder John Wesley – it is impossible to understand the values which will drive their positive investment programmes.

To put it simply. You need to know why in order to understand how.

This is why these Guidelines have been created.

The tension between faith beliefs and financial practice is, as mentioned earlier, an ancient conundrum. Many faiths have traditionally been quite clear about what they will not invest in. “Negative screening” has been happening for millennia. So for example, Islam, Daoism and Christianity have traditionally had a ban on usury. In all three cases, but in different ways and for a variety of reasons, this ban has sometimes slipped. But the reintroduction of Islamic Banking in the early 1970s marked a dramatic return of this core religious principle.

Many faiths have explicitly banned investment in armaments, alcohol, tobacco, gambling and anything to with crimes such as prostitution or illegal drugs. Some have also banned all investment in certain kinds of husbandry, be that the ban in Judaism and Islam on pig farming, or the ban in Hinduism and Buddhism on killing cattle – and in some cases in causing the death of any animal.

In recent years this negative screening has increased with new issues and aspects of investment coming on the scene. For example, many faiths are now engaged in the carbon disinvestment movement – removing their investments from fossil fuel industries. In October 2017 40 major Catholic funds publicly divested from fossil fuels to commemorate St Francis Day, the Catholic day of ecology. This kind of action is in response to awareness of the impact of burning fossil fuels on the climate and can be partly seen in the light of the United Nations’ long-term programme on addressing climate change. Other religious fund managers have taken stances on issues to do with human rights or social justice – for example disinvesting from businesses invested in regimes which oppress a sector of the community such as the stance against apartheid in South Africa and the religions’ support for the Civil Rights movement in the USA in 1950s and 1960s.

It is now fairly easy to find out what the faiths are against. This set of Guidelines takes us to another question: What are the faiths for? Or: What could or should the faiths be investing in to support the creation of an environmental and sustainable world? Or as the cover question on this book asks:

What do you do with your wealth to make a better planet?

In 2015 ARC was asked by the United Nations to co-host a meeting of the world’s major faiths with senior representatives of several sectors of the UN to discuss the forthcoming Sustainable Development Goals (SDGs) a set of 17 “Global Goals” which represent a collective vision and aspiration for what a world in the future could represent, and what we could all, collectively, work to make happen.

The meeting took place in Bristol, UK in September 2015 and 24 faith groups presented Commitments (known now as the Bristol Commitments) to action in support of various SDGs. At the event, many faith representatives observed how the SDGs were predicated on one economic model – essentially consumerist capitalism and the desirability of economic growth – and that there were alternatives that should be acknowledged and considered.

In studying these Commitments, the UN noticed that nine of them spoke of either having decided to move some aspects of their investments into environmental and sustainable development ventures or that they were planning to do so. This piqued the interest of both the United Nations Development programme (UNDP) and the Organisation for Economic Cooperation and Development (OECD). This is because if the SDGs have a chance of being implemented there has to be a huge values shift in the world of investment. If we are going to have a world with good health and well-being, with quality education, clean-water and sanitation, affordable and clean energy, where the goal of no poverty and all the other SDG goals will have come true, then investment and attention need to move now into supporting environmental and sustainable development products and initiatives. The faiths, with clear values, ought to be one of the very first communities to be able to respond to this.

In 2016 ARC was commissioned to research the potential for the faiths to become more pro-active as investors and the result was the launch of a booklet titled Faith in Finance at an international multi-faith meeting in Nanjing. This short book explored how and why faiths invest. It traced the rise of what is known as ‘faith-consistent investment’; put this in the context of the SDGs; compiled core teachings on finance from seven faiths and ended by proposing an international meeting of the major faith investment groups to take forward the potential for faith-consistent investment. The Zug meeting (October 30-November1 2017) and these Zug Guidelines are the direct result of that research and that book.

When we invited the many faiths and faith investment advisory groups (including for example the US-based Interfaith Center for Corporate Responsibility and JLens, the main Jewish financial advisory group) to send us their guidelines for positive, pro-active investment in environmental and sustainable development, we were not sure what response we would get.

For some faith groups this was an area that they were already engaged in. For example the Council of the Evangelische Kirche in Deutschland (EKD) were able to send us the third edition of their Guideline for Ethically-Sustainable Investment in the German Protestant Church. Others had touched upon this issue only primarily in the context of negative screening, such as the SGPC Governing Council of the Sikhs of India. Yet others including the China Daoist Association (because it is still recovering from nearly being wiped out in the Cultural Revolution) and Shinto of Japan (for whom offering advice is not part of their tradition) had never thought about this for a variety of reasons. Several traditions, including the Buddhist Association of China, are interested in what is happening in Zug this year, and although they are not represented in this booklet, will be discussing their own Guidelines.

This is why, when you read the many Guidelines in this book, you will see they offer a huge variety of levels of engagement and understanding of their potential role in the ‘impact’ or ESG/SDG world. This reflects both cultural and religious diversity. And if this were not so then you would not be truly hearing the voices of the world’s oldest and most successful sustainable communities because they are hugely diverse.

The wisdom and insights contained here come from communities who have steered their people through wars, ecological collapse, civil wars, famine, drought, plague, delight, terror, opportunities, hope and despair over millennia. As Gunnela Hahn of the Church of Sweden said at a preparatory meeting, the time perspective of the faiths represented here “is eternity”. And, as they always are, those faiths that are in this movement are in it for the long haul.

At one point there was concern from some of our advisors that there was too much wisdom and not enough business. However these Guidelines are about why there are the values capable of driving a “value-driven” investment programme. These values do not appear from nowhere. They arise from the core beliefs and teachings of the faiths and this book opens up this fascinating and highly motivated world for outsiders.

We asked each group to write Guidelines not just for the faith’s institutional investment programme but to also act as advice to, or a model for, individual believers. For example in our research we found there are some 70 Christian entrepreneur groups around the world helping wealthy Christians to invest in a faith-consistent way and many of the Christian Guidelines in this book will be useful to such groups. We also found that the Oxford Centre for Hindu Studies is the main advisory group on faith-consistent Hindu investment worldwide and offers this as much to families and individuals as it does to Hindu organisations.

It was also decided by our steering group (funded by WWF-UK) to ask each of our sponsors if they wished to write (or send us their existing statement of) a document about their own values. Most of them did and it was clear that for some this was also a journey beyond negative screening and into positive investment and that they too sometimes found it difficult to fully articulate what that would really look like. We are grateful to all those who did contribute. You can see summaries of their values document at the end of this book.

Zug was planned as a unique event bringing together eight faiths (and 30 traditions within them) as well as bringing together for the first time a number of faith investment advisory organisations: ICCR, Muslim Charities Forum, JLens, the Church of Sweden (representing Lutheran Churches of Scandinavia), the Oxford Centre for Hindu Studies and Globethics. Between them they have outreach to over 500 other faith investment groups. It is estimated that between them all they have access to some three trillion US dollars of investment money, a proportion of which could be committed to actively engaging in investing in environmental and sustainable development projects.

As a result, a platform for continuing this emerging partnership, not just between the faiths but also with the UN, development banks and the private sector, is being developed, to be based in Geneva. The Zug meeting was planned to be the launch of a new level of engagement and it could change the faith finance scene in a profound way, and with it, the kind of businesses that find finance.

This publication is just the start of a journey. We invite all those interested in faith-consistent investment – the faiths themselves; lay members of the faiths; the UN; philanthropies, the investment world and the wider environmental and development world, to work with these Guidelines to help ensure that the wealth and the wisdom of the faiths working with so many others interested in such investment, helps to make a better planet.

Finally a big thank you to our generous sponsors who made this possible: Charles Stewart Mott Foundation; Earth Capital Partners; Hermes Investment Management; Linius Capital; The Pilkington Foundation; Rathbone Greenbank; Resiliance Brokers; Sarasin and Partners, Tribe Impact Capital, Triodos Investment Management, WHEB, WWF UK. Special thanks also to R20, Swiss Impact Investment Association (SIIA) Globethics and Geneva Agape.

Bath, October 2017

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Related information

ZUG: Faith in Finance meeting
Zug, Switzerland October 29 to November 1, 2017. More than 40 faith investment managers will discuss how to invest more positively in sustainable, ethical funds and companies.
October 3, 2017:
Major Catholic church funds to make record divestment from fossil fuels
As more than 40 significant Catholic institutions pledge to make largest ever faith-based divestment, on the anniversary of the death of St Francis of Assisi, ARC prepares for a landmark meeting in Zug, where representatives from significant religious funds will discuss where they CAN put their investment wealth to make a better planet.
Guidelines for faith-consistent investment
The guidelines for faith-consistent investment