In 1758, at their yearly meeting in London, all Quakers were called to “to avoid being in any way concerned, in reaping the unrighteous Profits” from what they called the “iniquitous practice” of slavery. Members of the same faith would later be among the loudest to call for divestment from the apartheid regime in South Africa.

In 1891, Pope Leo XIII issued the Rerum Novarum encyclical that called all members of society to contribute to its betterment and outlined the relationship between labor and capital in a Christian society. Today it lends its name to a fund supporting Catholic businesses and philanthropy.

And as of 2016, 126 faith-based organizations of “diverse religions and creeds,” such as Islam, Buddhism, Judaism and Christianity, and with a collective $24 billion in assets, had committed to divesting from fossil fuels, with many feeling a moral imperative to provide clean energy to the world’s poor.

There are similar examples from all faiths—from Judaism to Sikhism to Buddhism—around the world. Faith-based investors have long recognized the importance of ensuring their money is not out of step with their convictions.

So, while the increased attention that values-based investing has received may be new, many faith-based investors have been doing this type of investing for generations.

From individuals to large religious organizations, these investors have a rich history of shareholder activism to improve the conduct of investee companies. Another popular strategy is portfolio building with a focus on screening out the negative; avoiding “sin stocks” or other assets at odds with their beliefs.

However, more recently, some of these investors have aimed to go a step further. Impact investing enables investors to set out a proactive thesis on the good they want to achieve and pursue it through investments, adding rigor and clarity. It builds on practices such as screening and shareholder activism to go out into the world and find additional investment opportunities that further the goals chosen in line with their faith.

Faith In Impact; Impact In Faith

Simply put, impact investing is investing to achieve both a financial return and positive, measurable social or environmental impact. It differs both from traditional philanthropy, which aims for impact but is unconcerned with financial returns, and from other forms of values-driven investment which aim at the avoidance of harm, but not necessarily the creation of additional, measurable positive benefits. Our recent research suggests the global impact investing market now stands at USD 502bn, but there is potential for much more.

Impact investing is another way for investors to deepen the ties between their capital and their faith. Unlike other responsible investing practices, impact investing is attractive to investors in that it allows them to know the actual impact their money is making.

Tim Macready, CIO of Australian superannuation fund Christian Super, explained that his organization’s involvement in impact investing was prompted by beneficiaries: “Our members and beneficiaries asked us what good we were doing with their retirement savings, and how we were investing those savings for their future.”

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