Articles of faith

The latest effort to get the godly to invest with their consciences looks like an straightforward socially responsible investing (SRI) initiative for the faithful. Launched in 2005, 3iG is predicated on estimates that the faiths constitute one of the major investing blocs.

But this isn't just about exercising refined sensibilities ethically: 3iG's member organisations have the same aspirations to clout as its US model, the Interfaith Center for Corporate Responsibility (ICCR), which represents 275 faith-based institutional investors, including pension funds, with $110bn (e87.6bn) in collective assets.

In one sense, the 3iG faith partners are natural investment partners. Islam, for instance, tempers individual rights with the responsibility to mitigate any impact on environmental resources - in addition to better known prohibitions on gambling and riba (interest). Daoists and Jains, among others, could happily sign up to sustainable environmental investment, which makes up 3iG's primary focus.

But other than the fact that they're faith groups, it is not clear that these groups have that much in common. Usury is prohibited in Islamic Shar'ia but not in Jewish Halakhic law, for instance.

"There is no one definition of ethics and even though many faiths share common concerns there will be differences," says Stephen Hine, head of international relations at Ethical Investment Research Services (EIRIS). "Thresholds of concern or tolerance may vary as well. So the definition of ethics is left to the given faith body and they will take informed decisions."

Not that 3iG shirks the big issues: stem cell research, nanotechnology and derivatives will all make an appearance at the organisation's November conference. But it will be interesting to see how much agreement the member organisations can reach on all but the common denominator of environmental responsibility and sustainable development.

3iG has avoided the sharpest conflicts by dispensing with any aspiration to unity - instead adopting a policy of "diversity" - and adopting a cluster model that allows investors to congregate around specific potential investments, such as micro-financing. It is a triumph of compromise, but will it work?

After all, faith-consistent investment faces the same issues as any other branch of socially responsible investment (SRI). In theory, at least, faith-consistent investing has moved beyond eliminating sin stocks to changing the world. A 3iG cluster is currently assessing the possibility of raising as venture capital some of the $700m estimated to be necessary to make alternative energy affordable and profitable.

But for all the via positiva, there is still plenty of via negativa for the stringent. In the US, the Catholic Ave Maria Fund, advised by Schwartz Investment Counsel, eliminates pharmaceutical companies "connected with abortion" and companies that offer employee benefits to unmarried partners - the latter a somewhat significant investment equities universe.

"Faith-based investors from certain traditions have avoided sin stocks: gambling, tobacco, alcohol," says Fr Michael Hoolahan, interim executive director of ICCR, which engages with companies rather than screens them a priori.

"Catholicism is a faith tradition that has focused on life issues. It is not surprising that pharmaceutical companies that manufacture and sell morning-after pills are not corporations that Catholics would want to invest in. Since it also believes that sexual relations should be confined to marriage, it is not surprising that the manufacture and selling of contraceptives would also be a cause for concern."

On this, the fundamental approach of SRI, there is putative consensus that engagement is next-generation SRI. In fact, there is little agreement - even internally. The Methodist church and CCLA, the Church of England fund manager, engage with companies. For Rabbi Mark Goldsmith, formerly of Liberal Judaism and now with the Reform synagogue (the two exist as separate strands within the UK), engagement - rather than screening - is "just the way we, as Jews, do things," he says, citing Leviticus' injunction to ‘reason with one another'. "It is a good way to move things on," he says.

Yet the Church of England, for one, has talked loudly of divestment in companies, notably Caterpillar, whose products the Israeli Defence Force uses in Palestinian autonomous areas. Closer to home - given 3iG's emphasis on environmental issues, in September the Church told IPE Real Estate that it would be willing to sell off greenbelt land for the development of a 240-acre business park.

Spokesman Steve Jenkins dismissed criticism that the sale of greenbelt land for development would conflict with statements recently made by a high-ranking bishop attacking irresponsible environmental practice.

"When the Bishop of London talked about ‘walking more lightly upon the earth', he was talking about our use of natural resources - not about specific bits of greenbelt land," he said.

Faith-consistent investing is a work in progress, according to Hine. "It is up to each client to determine the most appropriate response and action," he says. Some may only screen but [engagement] is an avenue being increasingly explored."

Even if faith-consistent investors find significant points of consensus, isn't their potentially considerable aggregated financial clout diluted somewhat by the possibility that faith communities will invest in assets that are outside (or even in opposition to) the tenets of their faiths? The investor community is, after all, much smaller than the faith community - and the two aren't necessarily aligned. Investors might worship as, say, Catholics, but they don't necessarily invest that way.

It makes no difference, according to Hoolahan. "I don't think the fact that some faith communities pay no attention to corporate responsibility in their investing diminishes our impact. They are just not there. It is like a void," he says.

Hine argues that there is in effect a natural alignment between faith groups' values and the value they are trying to derive from their investments. "The moral concern around climate change, access to medicines, child labour, human rights are also all potential risks for companies as well that can have financial impacts," he says.

So how exactly is this different from SRI?

The difference lies, says Goldsmith, in who's investing, rather than what they're investing in. "SRI-ers don't have congregations," says Goldsmith. "We're trying to make faith-based investors invest according to their faith."

What is important is the fact that faiths are wielding their investment power in concert - putting their cash behind their collective principles. He points out that Jewish organisations tend to have a relatively small asset base yet, like its larger partners, it wields the soft power of exhortation.

"Liberal Judaism has always had a wish to cooperate with other faiths," he says. "What It is not is an investment adviser but it wants to encourage Liberal Jews to invest according to their faith and values. We can't persuade, but we can influence and we can certainly encourage."

For all its minimal consensus - one that could prove fragile faced with divergence on key sectors and companies - the fact that it has faith groups acting en bloc is itself progress.

"Faith-based SRI brings religious groups together in a way that we can do something together," says Goldsmith. "You should see our meetings. We've had one in a Greek Orthodox monastery in Turkey, a Muslim country, one in a Parisian synagogue and one in the Vatican before moving on to Rome Central Synagogue. Who'd have thought it? I tell you, we cause a major security issue."