Leveraging the Power of Faith-Based Investors - By Aisling Eyers and Dr Rory Sullivan
Leveraging the Power of Faith-Based Investors - By Aisling Eyers and Dr Rory Sullivan
Church investors* are a distinct player in the responsible investment world. As with any asset owner, fiduciary duty is at the heart of their investment decision-making. In addition to these duties, they are also guided by their ethical values and beliefs which they seek to live out through their investment decisions. In many ways, their ability and obligation to clearly and unambiguously express ethical views and expectations makes them unique in the investment industry. It means they can champion issues that other investors are unable to. It means they can provide leadership and direction for others to follow. And, through their relationships with their investment managers, they have a financial lever that they can use to encourage change.
Church investors have been at the forefront of many debates in responsible investment, pushing for positive action on issues such as modern slavery, equal pay, responsible mining, climate change and mental health. However, there is also a sense that church investors could provide a stronger voice and press for even more.
So, what’s holding them back? It boils down to a combination of reasons. Firstly, many church investors lack confidence in engaging with their asset managers who tend to be responsible for the day-to-day management of their assets including some buy and sell decisions. There is also a lack of expertise of the investment process, making it challenging to hold asset managers accountable. This is accentuated by the fact that many church investors are, individually, relatively small players in terms of the assets they hold. Additionally, the lack of a common agenda between the church investor and the asset manager can lead to misalignment between the church investor’s values and their actual investments.
Mutual understanding builds a productive relationship
Building a trusting and productive relationship between the church investor and their asset manager is at the heart of the solution – one characterised by transparency, responsiveness and a shared understanding of goals. Just as asset managers may need to be educated on their client’s values and held accountable, church investors can also benefit from the deep expertise of their managers who could, for example, identify less obvious opportunities for positive impact.
To support this, Chronos Sustainability has developed a guide, titled Working with your investment managers: A guide to support church investors considering faith-consistent approaches. Created in collaboration with the Church Investors Group (CIG), the guide serves as an educational resource to demystify the investment process. It provides a common basis for dialogue and offers practical tools that investors can leverage. For example, it includes a template for assessing asset managers’ overall approach to responsible investment and a set of questions church investors can use to hold their managers accountable – ensuring that their specific values are fully reflected in their investments and that their managers are actively working to drive positive change through other means, such as by engaging with companies.
We expect that the report will enable this important group of investors to drive change whilst also pushing their asset managers to be more aligned with their moral beliefs. You can find the report here.
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*Church investors are institutional investors from mainstream church denominations and church related charities. The Church Investors Group (CIG) is made up of 67 church investors predominantly based in Britain and Ireland and with combined assets of over £26 billion. For more information about CIG, please see their website here.