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Journal of Business Ethics
ISSN 0167-4544
Volume 110
Number 3
J Bus Ethics (2012) 110:301-320
DOI 10.1007/s10551-011-1155-8
From Preaching to Investing: Attitudes
of Religious Organisations Towards
Responsible Investment
Céline Louche, Daniel Arenas & Katinka
C.van Cranenburgh
1 23
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From Preaching to Investing: Attitudes of Religious Organisations
Towards Responsible Investment
Ce
´line Louche •Daniel Arenas •
Katinka C. van Cranenburgh
Received: 7 April 2011 / Accepted: 15 December 2011 / Published online: 5 January 2012
Springer Science+Business Media B.V. 2012
Abstract Religious organisations are major investors
with sometimes substantial investment volumes. An
important question for them is how to make investments in,
and to earn returns from, companies and activities that are
consistent with their religious beliefs or that even support
these beliefs. Religious organisations have pioneered
responsible investment. Yet little is known about their
investment attitudes. This article addresses this gap by
studying faith consistent investing. Based on a survey
complemented by interviews, we investigate religious
organisations’ attitudes towards responsible investment
including opinions, practices and the impediments for
implementing faith consistent investing. Although our
results cannot be generalised because of the non-random
character of our sample, six main characteristics of faith
consistent investing are drawn: investing is not perceived
as being in contradiction with religious values, religious
values are important drivers, there is a strong community
around faith consistent investing, religious investors are
pioneering impact investing, implementing faith consistent
investing is not without difficulties, and practices vary
across regions. The survey also reveals that faith consistent
investing has many commonalities with secular responsible
investors.
Keywords Responsible investment Religion
Negative screening Positive screening Impact investing
Shareholder engagement Faith consistent investing
Introduction
Religions have always expressed a concern about how to
harmonise the values they preached and the realities of
commercial or business activity. More concretely, their
concern about how to combine ethical virtues and different
investment practices goes back at least several hundred
years (Domini 2001). For example, efforts to reconcile
religious beliefs and investment can be traced in the Jewish
doctrine of 3,500 years ago or in the Catholic tradition with
regard to the practice of taking interest on a loan and in
other types of contracts: ‘If equality is not maintained,
whatever is received over and above what is fair is a real
injustice’ (Benedict XIV 1745).
Religious organisations, especially in Europe and North
America, are important investors with sometimes sub-
stantial investment volumes. It seems, therefore, reasonable
and legitimate for religious organisations to raise and
address the question of how to make investments in, and to
earn returns from, companies and activities that are con-
sistent with their religious beliefs or that even support these
beliefs. As a result, religious organisations have pioneered
modern forms of responsible investment (RI) (Kreander
et al. 2004; Sparkes and Cowton 2004) in that they believed
that investing was not a neutral activity, but implied values.
For example, they shunned ‘sinful’ companies whose
products conflicted with their basic beliefs. The 1999 Trend
Report of the US Social Investment Forum stated:
In the mid-1900s, the founder of Methodism, John
Wesley, emphasized the fact that the use of money
C. Louche
Vlerick Leuven Gent Management SchoolReep 1, 9000 Gent,
Belgium
e-mail: celine.louche@vlerick.be
D. Arenas (&)K. C. van Cranenburgh
ESADE, Ramon Llull University Av Pedralbes, 60-62,
08034 Barcelona, Spain
e-mail: daniel.arenas@esade.edu
K. C. van Cranenburgh
e-mail: katinka.vancranenburgh@esade.edu
123
J Bus Ethics (2012) 110:301–320
DOI 10.1007/s10551-011-1155-8
Author's personal copy
was the second most important subject of New Tes-
tament teachings. As Quakers settled North America,
they refused to invest in weapons and slavery. (US
SIF 1999).
In 1971, the Methodists in the US established the Pax
World Fund that avoided investment in businesses involved
in armaments, alcohol and gambling. Also, Islamic banking
and finance has rapidly grown in the last years (Kinder and
Domini 1997; Schwartz 2003; Statman 2005; Kettell 2008).
Although the significant role played by religious or-
ganisations in the field of RI has been recognised by
practitioners and academics, little is known about their
investment beliefs and practices. RI in general has gained
considerable attention in the literature, but the focus has
mainly been on the financial performance of RI funds (e.g.,
Diltz 1995; Statman 2000; Bauer et al. 2005; Barnett and
Salomon 2006; Bauer et al. 2007; Amenc and Le Sourd
2010), the operation of RI funds (e.g. Sparkes and Cowton
2004; Graaf et al. 2009; Sandberg et al. 2009), RI inves-
tors’ behaviour (e.g., Anand and Cowton 1993; Lewis and
Mackenzie 2000; Lewis 2001; Keller and Siegrist 2006;
Glac 2009), shareholder engagement (e.g., Hoffman 1996;
Graves et al. 2001; Clark and Hebb 2004; Clark et al. 2008)
and on the information stream (e.g., Nilsson et al. 2010;
Rhodes 2010). This reflects the general lack of research
into religious organisations investment and accounting
practices (Booth 1993; Duncan et al. 1999; Kreander et al.
2004).
This study addresses this gap by studying the attitudes of
religious organisations towards responsible investment.
Attitudes can be defined as ‘learned predispositions to
respond in a consistently favourable or unfavourable
manner with respect to a given object’ (Fishbein and Ajzen
1975), or in other words as a positive or negative evalua-
tion of an object of thought. Attitudes are abstractions; they
are hypothetical or latent variables rather than an imme-
diately observable variable (Green 1953). According to
Green (1953), the concept of attitude does not refer to any
one specific act or response of an individual, but it is an
abstraction from a large number of related acts or respon-
ses. In this article, we study the opinions and practices of
religious organisations towards investing in general and
more especially towards responsible investing. Both opin-
ions and practices are expressions of attitudes (Katz 1960),
one being verbal and the other behavioural. Opinions refer
to the cognitive component of attitude, that is, the thoughts
and beliefs people hold about the object of the attitude,
whereas practices refer to the behavioural component of
attitude, that is, the dispositions to act in certain ways
toward an attitude object (Breckler 1984; Crites et al. 1994;
Ostrom 1969; Rodrigo and Arenas 2008). In this article,
religious organisations’ attitudes are investigated through a
survey. This study brings insights into not only an impor-
tant RI player but also one of largest groups of investors in
the world
1
that can play a significant role in creating
change towards sustainability through their investment
practices.
The article is structured as follows. First, it reviews
background on RI and its link to religious organisations.
Second, it presents the methodology of the study. Third, it
details the results of the survey and the main findings. In
the final section, it provides conclusions and discussions in
which research and managerial implications are outlined.
Background
Responsible Investment
Although there is considerable debate as to what truly
constitutes RI (Cowton 1994; Sparkes 1995; Cowton 1998;
Sparkes 2001), it can be described as a product, a practice
and a process (Louche and Lydenberg 2011). Responsible
investment is an investment product in the sense that in
addition to financial factors, investors acquire, hold or
dispose of companies’ shares on the basis of environmen-
tal, social, governance (ESG) factors as well as ethical
factors. It is a practice in the sense that RI is a way to
identify companies with strong corporate social responsi-
bility (CSR) records and to engage with companies to
encourage improved CSR performance. And RI is a pro-
cess through which investors try to influence corporations’
behaviour on a range of social, environmental and ethical
issues.
Responsible investment manifests itself in many ways
and, not surprisingly, goes by many names—it is variously
referred to as socially responsible investing, ethical
investing, sustainable investing, triple-bottom-line invest-
ing, green investing, best-of-class investing, ESG (envi-
ronmental, social and governance) investing, impact
investing and most simply and more recently responsible
investing. These different names reflect in part the evolu-
tion of the RI field over time. If RI started as a marginal
movement in the United States several hundred years ago,
today it is known and practiced throughout the world.
Although precise figures are difficult to come by, there has
been a significant growth of assets under RI management
since the late early 2000s. In the United States, RI assets
under management were at $3.07 trillion in 2010, repre-
senting 12.2% of the $25.2 trillion in total assets under
management (US SIF 2010). RI assets increased by 380%
1
According to His Excellence Mr Ban Ki-moon, United Nations
Secretary General, speech at the Celebration of Faiths and the
Environment in Windsor in November 2009.
302 C. Louche et al.
123
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from 1995 to 2010. In Europe from 2002 to 2010, RI asset
under management has been multiplied by almost 15. Eu-
rosif has placed the value of the RI market at €5 trillion as
of December 31, 2009 (Eurosif 2010a). However, its
understanding, practices and the actors involved have
changed over time. Louche and Lydenberg (2010, 2011)
have identified five phases in the development of RI.
•Roots phase, eighteenth century. This is the very early
stage of RI. The main actors were religious institutions.
•Development phase, 1970s to late 1980s. This phase
marks the beginnings of RI in the contemporary sense
of the term during which RI was transformed from a
faith-based activity into an activity promoting a public
awareness of the social responsibility of corporations
(the self-conscious phenomenon of RI) (Sparkes 2001).
During this phase, RI is particularly driven by political
and protest movements of that time such as the anti-
Vietnam War and anti-apartheid in South Africa
(Louche and Lydenberg 2006). In the 1980s, RI also
took root in Europe (The Friends Provident Steward-
ship Unit Trust in 1984). Simultaneously, a number of
RI support organisations were created, such as the
Interfaith Center on Corporate Responsibility (ICCR)
in 1971.
•Transition phase, 1990s. During the early 1990s, RI
began a gradual transition to a less confrontational
approach with a strong growth in environmental
concerns. During this period emerged the so-called
green funds, especially in Europe. This period also saw
the number of social rating agencies and RI indexes
grow rapidly.
•Expansion phase, 2000s. The beginning of the twenty-
first century heralded a turning point for RI in both its
approach and its growth. Professionalisation and
growth characterise this period. RI began to find
acceptance in the mainstream investment community,
leaving behind its more activist image and becoming a
more commercially viable endeavour (De
´jean et al.
2004; Louche 2004).
•Mainstreaming phase? 2010s. Around 2010, RI stood
at a crossroads. Its increasing acceptance by institu-
tional investors was marked by such events as the
launch of the Principles for Responsible Investment
(PRI) in 2006. By 2010, the PRI had grown into a
coalition of more than 800 of the largest institutional
investors and asset managers worldwide, representing
some $22 trillion under management. This current
period could well mark the mainstreaming of RI.
Gradually, the role of religious organisations in the
different phases became less and less dominant to become
secondary today. Religious origins are still found in the
secular RI community, although their presence is less
obvious. As RI has been adopted by mainstream financial
institutions, they have become the main actor both in the
discourse and practices of RI but also in academic research.
Nonetheless, religious organisations are still active RI
actors through what we call in this article faith consistent
investing (FCI). Networks such as ICCR and 3iG, which
promote responsible investment among religious organi-
sations, are quite representative of the interest of this group
of investors.
Religious Organisations and RI
If one wants to study the investments made by religious
organisations themselves, it is important to understand the
characteristics of religious organisations and to have an
historical perspective on the involvement of religious or-
ganisations in the activity of responsible investment. We
begin by providing a description of religious organisations
and then we present the role and engagement of religious
organisations in the RI movement.
The Nature of Religious Organisations
A precise definition of religious organisations can be elu-
sive. Indeed, there are different definitions and the scope of
the concept might vary creating potential problems for
interpretation. As expressed by an Israeli internal relations
professor talking about Jerusalem:
The question is: what is a religious institution? Is it just
a church or also a monastery or a hospital? Is it just a
synagogue or also a private mikve [ritual pool] or
yeshiva [Talmudic academy]? Is it a church library, a
church-run women’s club? What about other Christian
denominations, the Muslims, the Druze and Bahai?
There is no end to it. In the ‘Holy Land’, everything is
someone’s religious institution. (Cohen 2010)
In short, what constitutes a religious organisation is not
self-evident. Even within a religion, the legal and organi-
sational structure may vary as well as the decision-making
process. Those variations are of importance as they may
produce different decision-making processes and thereby
directly influence the practices of religious organisations
towards responsible investment. Some religions establish
corporations to facilitate business activities, whereas others
operate through unincorporated associations. Even reli-
gions as established as the Anglican or Catholic Churches
do not have an easily identified legal existence (Gordon
Pole 2005) and often consist of multiple organisation
forms. For example, when considering the Catholic
Church, there are at least three kinds of organisations one
might encounter in the universe of investors: the diocese,
the religious order and the non-profit organisations, such as
From Preaching to Investing Attitudes of Religious Organisations 303
123
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universities and hospitals. These organisations might be
legally subordinate to a bishop or a religious order but also
be governed by a lay board of trustees, which is often the
case at universities and colleges.
In the field of business ethics, Valor and de la Cuesta
(2007) define ‘a religious group’ as any religiously inspired
organisation, which includes a very broad range of organ-
isations. According to the sociologists Stark and Bain-
bridge (1987), a religion must be based on some
‘supernatural assumptions’, that is related to things that are
not immediately available, to distinguish it from secular
thought. In their view, religions involve ‘systems of gen-
eral compensators based on supernatural assumptions’
(Stark and Bainbridge 1987). By compensators, they mean
whatever people regard as rewards whether they are
immediately apparent (Stark and Bainbridge 1987).
Thereby, the core task of religious organisations is the
provision of supernatural compensators (e.g., religious
doctrines) as well as temporal rewards (e.g., church
membership). Another important characteristic of religious
organisations based on Durkheim’s definition is that they
involve collective actions (Durkheim 2003).
For the purpose of this study, we have defined religious
organisations as organisations whose structure and mem-
bership criteria are derived from a certain body of doctrine
and belief and are devoted to cultivate among their
adherents or followers (and sometimes promote among
others) a particular form of religious practice and worship
that is expressed in ritual forms. These organisations are
clearly distinguished from government, public or private
secular associations or institutions and corporations. One
could also distinguish them, in a narrow sense, from other
institutions that religious organisations may sponsor like
NGOs, charity organisations, schools or universities, which
are established to realise a specific priority of the religious
tradition or mission. Yet, in practice, the boundaries
between a narrower and a broader sense of the term are not
easily drawn and our study includes both.
Religious Investment and Responsibility
The first RI funds were launched by religious organisations
both in the United States and in Europe (Louche and Ly-
denberg 2006). In the early 1900s in the United Kingdom,
the Methodist Church set up a fund that avoided invest-
ments in certain sectors and in 1984, Friends Provident, a
Quaker-affiliated insurance company, launched its socially
screened Stewardship Fund. In Sweden, the Church of
Sweden established the Ansvar Aktiefond Sverige in 1965.
In France, Nouvelle Strategie Fund, the first RI fund, was
launched in 1983 by Nicole Reille, the finance officer of
the Notre-Dame Order in Paris. In 1990, the Netherlands
saw its first RI fund created by ABF, Het Andere
Beleggingsfonds, an initiative of Church groups and envi-
ronmental movement. In Finland, the Church of Finland
was involved in launching the two first ethical funds; in
Germany, early ethical funds were launched by local
Church banks, such as the KD Fonds O
¨koinvest in 1991.
And in the United States, the Methodists and Quakers set
up the Pax World Fund in 1971.
Religious organisations have also been very active set-
ting up organisations that have played an instrumental role
in the development of RI such as rating agencies. For
example, Ethical Investment Research Service (EIRIS) was
created in 1983 jointly with the Quakers, the Church of
England, the Church of Wales, the Methodists, the Pres-
byterian Church of Ireland and the Society of Friends and
some charities (Mackenzie 1997). In the US, religious
groups initiated the Interfaith Center on Corporate
Responsibility (ICCR) in 1971 in response to a concern for
the situation in South Africa. In 1972, a group called the
Christian Concern for Southern Africa (CCSA) was foun-
ded to campaign and lobby banks and investors on the
apartheid issue. In 2005, the International Interfaith
Investment Group 3iG was set up to promote interfaith
cooperation in the investment sector.
This brief historical review shows the importance of
religious groups in stimulating and launching the field of
RI. Their main objective was to put religious beliefs into
practice, to harmonise the spheres of values and business
and to use any available tools to have a positive social
impact. Because of this specific goal, directly linked to
their beliefs, RI practiced by religious organisations is
called ‘faith consistent investing’ (FCI) (Rossetti 2005).
One of the characteristics of FCI has been the ‘avoidance
strategy’ or what is also referred to as the exclusion of ‘sin
stocks’, such as tobacco, gambling, pornography and
alcohol. This approach roughly corresponds to the moti-
vation of avoiding companies engaged in businesses or
practices regarded as unacceptable or unethical. The
underlying moral principle here is ‘do no harm’.
Today, religious organisations are still very active. One
needs just to look at religious indexes launched in the last
15 years, such as the FTSE Global Islamic Index Series in
1998, the Dow Jones Islamic Market Index family laun-
ched in 1999, the India Islamic Index in 2008, the Dharma
Indexes in 2008 or the STOXX Europe Christian Index in
2010. There are also many examples of FCI initiatives
taken by religious organisations. The Church of England
created in 1994 the Ethical Investment Advisory Group, a
group of religious and investment specialists that debate
issues relating to the church and ethical investment.
2
The
international Roman Catholic Missionary Oblates of Mary
2
For more information see the Church of England’s website,
www.cofe.anglican.org/info/ethical, accessed on February 26, 2011.
304 C. Louche et al.
123
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Immaculate has set up investment committees on local and
central levels to ensure their investment activities are
guided by Catholic Social principles. This same religious
community also very actively uses its shareholders rights to
promote ‘a more equitable and sustainable world’.
3
The
Union for Reform Judaism resolution of 1997 states
‘Socially responsible investment policies and practices are
not an optional commitment. They are an organic expres-
sion of our core beliefs’.
4
The Protestant Methodist
movement has large RI funds through their UK-based
Central Finance Board of the Methodist Church
5
and the
US-based General Board of Pension and Health Benefits
that supervises and administers retirement plans, invest-
ment funds and health and welfare benefit plans
6
. The US-
based National Jesuit Committee on Investment Respon-
sibility, besides having a RI policy for its institution, also
calls on its followers to practice RI, by means of ‘staying
informed, praying, proxy voting and information sharing’.
7
Despite the historical role of religious organisations in
developing RI and the many current FCI activities, little is
known about religious organisations attitudes towards
responsible investment. Many scholars have studied the
role of religion in the broader field of CSR and business
ethics (Acquier 2005; Brammer et al. 2007; Van Buren
2007; Hui 2008; Ramasamy et al. 2010; Williams and
Zinkin 2010). A special issue of the Business Ethics
Quarterly (Vol. 7, No. 2, March 1997), for example, has
been devoted to religion and business ethics. But very few
have focused on FCI. The few existing studies have a
limited scope. Some of them focus on a specific country
such as Valor and de la Cuesta (2007) who investigated
investment demands from religious groups in Spain, or
Kreander et al. (2004) who looked at the UK market. Other
studies have focused on a specific RI activity such as Van
Buren (2007) who examined religious shareholder activism
in the United States. A third set of studies looked at some
specific religions. For example, Schwartz et al. (2007)
examined RI from a Jewish perspective, Kreander et al.
(2004) studied stock market investment practices of the
Church of England and UK Methodists and several articles
are focusing on Islamic mutual funds (Naughton and
Naughton 2000; Al-Amine and Al-Bashir 2001; Archer and
Karim 2002; Delorenzo 2002; Forte 2007). To our
knowledge, only one study, Ghoul and Karam (2007),
made a comparison of Christian, Islamic and RI mutual
funds. Finally, a last set of research concentrates on issues
related to risks, return and performance integrating reli-
gious principles in investment strategy (Girard and Hassan
2008; Hood et al. 2009).
Method
For the purpose of the research, we conducted an online
survey among religious organisations worldwide and
addressed to all types of religions. The next paragraphs
present the sample, the questionnaire and the limitations of
the study.
Sample
As mentioned above, the aim of this study is to provide
insights into attitudes of religions organisations towards
responsible investment. One of our first challenges was to
create a database with a broad scope of religious organi-
sations in terms of both geographical spread and religion.
To our knowledge, such database does not exist. Two
approaches were used to reach our targeted sample.
The first approach was based on Internet search. The
aim was to collect contact information from religious or-
ganisations around the world. This was done religion by
religion. The Internet search led to a database of 316
Christian, 142 Baha’i, 133 Buddhist, 13 Shinto and 13
Hindu representatives of organisations. Through this mean,
we managed to create a database of 614 e-mail addresses.
The second approach was more targeted. We asked
several religious investor groups (RIGs) around the world
to co-operate with us on this research project. Five RIGs
positively responded, namely, Interfaith Centre for Cor-
porate Responsibility (ICCR) based in the USA, Interna-
tional Interfaith Investment Group (3iG) and Oikocredit
based in the Netherlands, the Ecumenical Council for
Corporate Responsibility (ECCR) in the UK and the
Shareholder Association for Research and Education
(SHARE) in Canada. Many of those organisations have an
international reach in terms of members although Anglo-
Saxon members remain dominant. Through this second
approach, the survey was sent to 513 religious organisa-
tions’ representatives. Databases of the RIGs overlapped
slightly. As a result, some members of the targeted group
have received the survey request from several RIGs. Note
that only one representative per organisation was allowed
to answer.
3
For more information see OMI Justice and Peace/Integrity of
Creation Office’s website, www.omiusajpic.org, accessed on Febru-
ary 26, 2011.
4
For more information see Union for Reform Judaism’s website,
www.urj.org, accessed on February 26, 2011.
5
For more information see The Central Finance Board of the
Methodist Church’s website, www.cfbmethodistchurch.org.uk,
Accessed on February 19, 2011.
6
For more information see the The General Board of Pension and
Health Benefits’ website, www.gbophb.org, Accessed on February
19, 2011.
7
For more information see www.jesuit.org, Accessed on February
19, 2011.
From Preaching to Investing Attitudes of Religious Organisations 305
123
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In the second approach, we were sometimes provided
with the full database but many times the RIGs sent the
survey themselves. Such approach implies losing control
on the database as the RIGs took full responsibility in
sending the survey and reminders.
In total, the survey was sent to 1,127 people. However,
the first approach to reach our targeted sample was not very
successful as many of the e-mail addresses were not active
anymore and bounced back when we sent the survey or
were never opened (459 in total). We have to recognise that
Internet sampling may lead to sampling errors and poses
special problems for sampling target populations. Internet
is vulnerable in inducing invalid response (Best and
Krueger 2004). Therefore, we can consider that the survey
was sent to 668 people. Based on those calculations, we
can approximate the response rate at 15.42%. The sub-
mission period for completing the online survey was from
20th October 2009 to 5th January 2010.
Survey
Design and Testing
Before the survey, we conducted two focus groups on the
16th of July 2009. In total, 25 representatives from dif-
ferent religions—Jewish, Christian and Islamic—partici-
pated in the focus groups. The representatives were all
directly or indirectly involved in the financial management
of their respective organisation. The objective of the focus
groups was to get insights into the beliefs, practices, gaps,
barriers and incentives bearing on faith consistent investing
as well as grasping the vocabulary used by religious
organisations when talking about RI. The focus groups
were tape recorded and transcribed verbatim.
A first draft of the survey was designed based on the
inputs from the focus groups and the literature review. The
survey was tested on more than ten experts, from various
institutions, religions and countries. The test group inclu-
ded academics—especially experts in survey designs,
practitioners from religious organisations and experts in
responsible investing. The aim was to get detailed feedback
on the survey on content, format, length and style/wording.
This feedback was especially important because the ques-
tionnaire was to be sent to a very broad range of religious
organisations in different countries.
Representatives of the sampled religious organisations
were contacted by e-mail and asked to fill in the online
questionnaire. The questionnaire was available only in
English.
In addition, we had access to 3iG’s data and knowledge.
Throughout the project, from the conception of the survey
to the analysis of the results, we had regular discussion
with 3iG’s team and some of 3iG members. 3iG’s insights
and experience has been extremely helpful and useful also
for the analysis of the results, to contextualise, reflect and
make sense of the data.
Questionnaire
The questionnaire was organised in four sections: opinions
towards investing, existing RI practices, impediments/
facilitators for investing in RI and finally general infor-
mation on the institution represented and the respondent.
The design of the questionnaire was based on previous
academic research, such as Guyatt (2006), Glac (2008),
Lewis and Mackenzie (2000), Schaefer (2004), Juravle and
Lewis (2008) and Amaeshi (2010), practitioner reports
such as Eurosif (2010b) and US SIF (2010) and practices
from social rating agencies such as EIRIS, Sustainalytics
and SAM. Valor and de la Cuesta (2007)’s article has been
an important source for structuring the questionnaire.
Table 1provides an overview of the variables used to build
the questionnaire, and the sections in the following detail
the four first dimensions.
Opinions Participants were questioned on their opinions
about the activity of investing. The objective was to
explore the opinions of religious organisations with regard
to the activity of investment in general and more especially
RI and FCI. Do religious principles prohibit or inhibit
investment? Is the activity of investing disconnected from
religious believes? Do they perceive potential positive
impacts between their investment activities and societal
wellbeing? But also are there some RI practices that are
more appropriate or acceptable than others?
The representatives of religious organisations were
asked to indicate the extent to which they agreed with 16
statements. The statements related to the potential impact
of investment practices on society in general and on busi-
ness activity in specific. There were also statements linking
investment practices and respondents’ faith. Last, respon-
dents were asked to state the degree to which they believed
they should be active owners of their shares (in other
words, to what extent they felt they should be engaged
shareholders).
Practices In this section, participants were asked about
their current investment practices. We investigated four
main aspects: negative screening, positive screening,
engagement and impact investing. The first three categories
represent the three dominant strategies in the RI field.
Negative screening refers to the avoidance strategy
approach. It seeks to avoid investing in companies engaged
in businesses or practices regarded as unacceptable or
generally harmful to society. It can be based on the
exclusion of certain sectors or of certain activities. Positive
306 C. Louche et al.
123
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screening refers to what is often called ‘best-in-class’
approach or also relative selection. This approach aims at
selecting sector leaders on environmental, social, and
governance (ESG) criteria. It invests across all industries
and sectors, selecting the best-performing companies in
each. It is often based on numerous indicators related to
aspects on the environment, corporate governance, busi-
ness ethics, employees, contractors and customers and
community involvement. The third approach, engagement,
refers to shareholder activism or dialogue. It aims at
entering into a dialogue with companies and engaging with
them to voice shareholders’ concerns on ESG and ethical
issues. The engagement approach can be done through
either confrontational or soft actions.
Impact investing is a new upcoming approach in the field
of RI (Cordes 2010; O’Donohoe et al. 2010; Van Cranen-
burgh 2010). The definition in its most simplified way is
‘investments intended to create positive impact beyond
financial return’ (O’Donohoe et al. 2010). Impact investing
can be described as investments that explicitly aim to solve
social or environmental challenges or promote community
development while generating financial returns. It focuses
on investing solely in initiatives, projects or companies that
have a clear and direct positive social and environmental
impact, rather than industry-benchmarked companies
according to certain environmental, social and governance
criteria. Religious institutions have historically been at the
origin of this approach although, as with their contribution to
RI in general, their role tends to be neglected in the litera-
ture. For example, the 2010 report co-produced by Global
Impact Investing Network (GIIN) and J.P. Morgan
(O’Donohoe et al. 2010) does not mention religious organ-
isations at all. Nonetheless, Methodists, Catholics, Menno-
nites, Baptist and Jewish organisations have been involved
in impact investing over decades (Bugg-Levine and Gold-
stein 2009). Although for a long-time impact investing did
not attract much interest and remained a very marginal
activity, these last years the movement is growing and starts
to attract a wide range of investors (O’Donohoe et al. 2010).
Among religious organisations, some of the most recent
examples include the Positive Social Purpose Lending
Programme focusing on housing, education, health and
micro-finance; the Global Solidarity Forestry Fund (forestry
in Mozambique); the Catholic Health Initiative and the
cleantech and micro-finance fund in Paraguay named Sarona
Risk Capital Funds. Also on an interfaith basis, religious
organisations have joined forces to create social impact, as
in the Isaiah Fund, focusing on community development and
affordable housing (Van Cranenburgh 2010).
In total, participants were asked 12 questions, the pur-
pose of which was to supply evidence on the actual
investment practices of religious organisations. In addition,
information was captured on who makes decisions and
whether there are written investment policies.
Table 1 Overview table of the
variables Factors/dimensions Variables Inspirational sources
Opinions towards investing Religious prohibition or limitations
on financial investment
Glac (2008), Lewis and
Mackenzie (2000),
Schaefer (2004)
About impact of investment on society
About social impact of RI
About financial impact of different
RI practices and strategies
Existing RI practices Negative screens Eurosif (2010a,b), US SIF
(2010), Social rating
agencies, such as EIRIS,
Sustainalytics and SAM
Positive screens
Impact investing
Engagement
Responsibilities and leadership
Explicit written policies
Impediments/facilitators
for investing in RI
Organisational (internal structures,
processes and cultures)
Guyatt (2006), Amaeshi
(2010), Juravle and Lewis
(2008), Valor and de la
Cuesta (2007)
Role of financial advisor
Adequate products available
Profitability
Risks
Evidence of social impact
Evidence of change in company behaviour
Tools available
Complexity of RI products
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Impediments/Facilitators for Investing in RI
Several studies in the field of RI have focussed on the
impediments for responsible investment (Guyatt 2005;
Amaeshi and Grayson 2006; Guyatt,2006; Juravle and
Lewis 2008). Juravle and Lewis (2008) identified three
types of obstacles: individual (cognitive biases and belief
systems), organisational (internal structures, processes and
cultures) and institutional impediments. Examples of this
last type are the structure of the investment value chain,
regulatory and mimetic pressures on trustees and fund
managers, and financial market inefficiencies. Valor and
de la Cuesta (2007) found that ‘unlike individual inves-
tors, institutional investors [they are talking about reli-
gious investors, although in a very broad sense] do not
think that the main constraint on investing ethically is the
lack of economic performance of RI products’. It also
found that ‘if offered a product closer to their needs, they
would increase the amount invested ethically by over
15%’. In addition, they identified a lack of information
available in the Spanish market as one of the major
obstacles. In other words, the main obstacles in that
context appeared to be institutional rather than individual
or organisational.
Our questions were designed based on those insights.
However, the individual types of impediments were left out
as it was already tackled in the attitude section. Respon-
dents had to react to 14 statements that explored the factors
that may hinder or stimulate change in their investment
practices. The objective was to identify barriers and
incentives for aligning religious organisations’ investment
practices and religious beliefs.
We designed questions about the way respondents per-
ceived the process of FCI. They were asked a series of
questions about whether they thought they had a control
into the way money was invested. For example, this section
of the survey included a question about the role of the
financial advisor but also questions about their perception
of investment products in terms of complexity. They were
questioned about the adequacy of the investment products
offered, whether they were aware of RI and whether those
products responded to their needs and demands. Some
questions addressed the issue of the perceived financial
profitability and risks of aligning investment strategies to
their faith principles.
In addition, participants were asked about the features
that could stimulate (or inhibit) FCI in their organisations.
The questions addressed aspects related to financial returns,
societal impacts, companies’ behaviour and tools available.
In Table 1, we summarise all the factors and dimensions
as well as the variables that formed the survey used in this
study. We also point to the academic sources that served as
references to design the survey.
Limitations
The methodological choices and constraints are not without
consequences on the results. We would like to discuss three
main limitations that are of particular importance when
analysing and interpreting the findings.
It is difficult to ascertain how many religious organisa-
tions are there in the world. Hence, it is also difficult to
know what an appropriate size of sample would be for a
study like this. Clearly, the Internet research to identify
religious organisations worldwide bore little fruit. This led
us using the existing religious investor groups that, by their
very nature, included religious organisations that were
already interested and involved in FCI. This resulted in a
non-random sample; hence, all statements and conclusions
should be used with extreme caution. It may be said that
this is purposive sampling: The survey was directed to
those probably already knowledgeable on the topic.
The second and third points relate to the geographical and
inter-religious scope. The second important limitation is
language. The study was conducted in English, which has
certainly kept potential respondents from participating
despite our efforts to try to involve religious organisations in
countries such as France, Belgium, Spain and The Nether-
lands. The language was a crucial obstacle and limited the
geographical spread of the sample. As a result, our sample is
highly biased towards English-speaking countries.
A third limitation is the variety of religions represented in
the sample. Although we intended and tried to get a mix of
religions, our sample ended up being highly biased towards
Christianity, mostly from North America and Western Eur-
ope. This bias maybe explained by the networks we used to
construct our database, the RIGs. Indeed, the RIGs that have
helped us with distributing the survey were for most of them
based in North America (ICCR, SHARE). The majority of
the members of those RIGs are Christians even if they tar-
get all faiths. At any rate, we should conclude that certain
religions are more involved than others in FCI.
Despite these limitations, the survey and its analysis
offer a first provisional overview of some of the attitudes of
religious organisations towards responsible investment,
which will contribute to further studies.
Results
In this part of the article, we present and analyse the results
of the survey. The results are organised into four parts:
‘Opinions’ in which we present what religious organisations
think of the activity of investing as well as the appropri-
ateness of the different RI approaches, ‘practices’ in which
we portray the reported RI practices of religious organisa-
tions, ‘barriers/facilitators’ in which we report on the
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perceived impediments for religious organisations to prac-
tice FCI and ‘regional differences’ in which we address the
issue of regional specificities. Before going into the core of
the survey, we start by describing the respondents.
Respondents
Geographical and Religion Distribution
Responses were received from 103 organisations, of which
57 were from North America, 22 from Europe, 4 from
Africa, 3 from Asia, 1 from Oceania and 16 unknown (as
they did not answer to the question on national origin). The
responding organisations can be roughly divided into three
main categories that, although different, are all steered by
trustees that are expected to guide their organisation in
accordance to their religious beliefs: (1) a large majority
(78.8%) were religious institutions with the mission of
continuing and spreading their religious beliefs, such as
churches, diocese, congregations and orders; (2) a smaller
group (12.1%) consisted of either financial organisations
managing directly religious organisation’s funds or for a
very small number organisations specialised in services to
religious organisations with regard to responsible invest-
ment; and (3) a last group (9.1%) represented institutions
that are religiously inspired but the religion serves as a
guide for reaching certain objectives (health/fair trade/
education) rather than being the objective in itself.
The majority of respondents (90%) were of the Christian
religion, and within Christianity, most respondents were
Catholics (68%). Out of the 103 respondents, 81% com-
pleted the whole survey. Although we aimed at having a
very diversified sample in terms of geographical scope and
religions represented, our sample is biased towards one
specific religion, namely, Christian, and respondents are
dominantly from one region of the world, 55% are form
North America. Furthermore, the 21% respondents from
Europe are dominantly from the UK. Those indications are
important to keep in mind when analysing the data.
Respondents’ Profile
About 89% of the respondents were directly involved in the
investment decision process within their respective organ-
isations. Although the implementation of the investment
policy might often be conducted by investment managers,
the respondents of our survey were in charge of the
investment policy as their positions in their organisations
show: treasurers (17%), members of the investment com-
mittee (16%), heads of the institution (14%), members of
the board of trustees (13%), financial advisors (7%) or
theological advisors (2%). Out of the 31% mentioning
they had another position in their organisation, 5 were
responsible for CSR, 4 mentioned they were directors, 2
worked in the area of ‘justice’ and 2 contracted for
responsible investing. Only 4% of the religious organisa-
tions involved theological advisors (Rabbi, Imam, Monk,
Priest, etc.) in investment decisions. In most organisations,
investment decisions were made involving several repre-
sentatives, including boards of trustees (57%), heads of
institutions (20%), investment committees (69%), treasur-
ers (37%) and financial advisors (38%).
Because religious organisations can be either very cen-
tralised or on the contrary very decentralised, we asked the
respondents to give us an indication of the geographical
scope of their organisation. Most of the religious organi-
sations that answered the survey operated on a country
level or beyond (continental or global level). Only 17% of
the respondents indicated they operated on a provincial or
village level.
The gender ratio between respondents was fairly even:
52% were female and 48% male. With regard to the age
distribution, 65% of respondents answered that they were
older than 56. None stated an age younger than 25.
Institutional Networks
In the survey, respondents were asked whether their insti-
tution was member of one or more RIGs or other RI-spe-
cific networks. Most of the religious organisations that
responded to the survey were affiliated to religious investor
groups, such as the ICCR (66%), Oikocredit (24%), 3iG
(17%), ECCR (10%), CIG (5%), CCLA (3%) and SHARE/
Kairos (6%). By contrast, very few of the organisations
were affiliated to secular or general responsible investment
initiatives, groups or networks, such as Social Investment
Fora (SIF) (13%), the UN Principles of Responsible
Investment (UNPRI) (6%) or the Carbon Disclosure Pro-
ject (CDP) (7%).
Opinions
Opinions on Investment Activity
In general, the activity of investing did not seem to be in
any manner conflicting with religious principles, although
6% of the respondents felt that they should avoid investing
on the stock market altogether. For a large majority,
investing and religious principles should not be discon-
nected. About 86% of the respondents did not see investing
as a separated financial matter but indeed wanted their
beliefs to be reflected in their investment decisions.
Investing neither was regarded as a ‘neutral’ activity nor as
a way ‘to feel good’. Respondents believed that investment
was a way to influence corporate behaviour (90%) and
positively affect society (92%).
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Opinions About Investment Practices
In general, religious organisations did not see any of the RI
practices in contradiction with their faith. Be it negative
screening, positive screening or engagement, all three
approaches were perceived as appropriate. However, we
found some nuances in the perception of those different
approaches.
When integration of religious beliefs into investment
decisions was practiced, religious organisations often found
it more appropriate to avoid investments in certain activities
or products (86%), than avoiding companies in certain
countries (only 58% found it an appropriate approach). It
seems that country avoidance was a more sensitive issue.
This might be because of the fact that avoiding countries can
have political impacts beyond religion which can create
tension with the concept of separation of church and state, a
concept that has been adopted in a number of countries.
Among the engagement approaches, we saw fewer differ-
ences. Both the more confrontational and the less confronta-
tional approaches were highly rated (all between 69 and 91%).
However, the most confrontational methods such as engaging
in public debate when in disagreement with the activity of a
company or divesting were regarded as slightly less attractive
(78 and 69%, respectively) than other strategies.
Our results show that a large majority of the respondents
found all the aforementioned strategies appropriate. As we
will see in the next section, similar findings were found
with regard to institutions’ actual practices.
Opinions on the Impact of Integrating Religious Beliefs
The impact of integrating ESG factors into investment
decision has been the object of ongoing debate and
extensive academic study. Many studies have argued that
ESG factors can help investors avoid risks and help them
identify high-quality corporate management (Camejo
2002; Derwall et al. 2005; Bauer et al. 2006; Edmans
2010), whereas others have argued that any restriction on a
universe of potential investments may increase undiversi-
fied risks and reduce risk-adjusted returns (Rudd 1981;
Kreander et al. 2005; Barnett and Salomon 2006; Bauer
et al. 2006; Renneboog et al. 2008).
8
Many authors, how-
ever, tend to indicate that ESG screening does not hurt a
fund’s financial performance (Statman 2000; Bauer et al.
2005,2007; Benson et al. 2006; Amenc and Le Sourd
2010). For example, a review of 31 socially screened
mutual funds from 1990 to 1998 found that on average
they outperformed their unscreened peers, but not by a
statistically significant margin (Statman 2000). Similarly, a
2001 academic review of 80 studies on the links between
CSR and financial performance found that 58% of the
studies observed a positive relationship to performance,
24% found no relationship, 19% found a mixed relation-
ship and only 5% found a negative relationship (Margolis
and Walsh 2001). Research also provides evidence that RI
investors hold very diverse beliefs regarding the financial
returns of RI (Lewis and Mackenzie 2000).
Our survey revealed that the same ambiguity exists
among religious institution. Indeed, respondents’ opinions
on the impact of integrating religious beliefs in investments
significantly varied. About 69% of the respondents
believed that religious considerations can negatively affect
investment returns but, at the same time, more than 87%
believed that it can positively affect investment returns.
Practices
After presenting the opinions of religious organisations on
faith and investing, we move to their actual practices. A
large majority of them practiced one or another form of RI:
88% practiced shareholder engagement, 87% practiced
negative screening, 79% practiced positive screening and
77% practiced impact investing. These results are not
entirely surprising because most of the respondents were
members of RIGs whose purpose is to stimulate and
encourage RI practices among religious organisations.
However, the high rate of religious organisations practicing
impact investing was unexpected because this activity is
more innovative and by far less mainstream. We can,
therefore, assume that our respondents are among the most
aware and advanced investors with regard to RI practices.
Only two of the respondents used none of the RI approa-
ches. One of them strongly believed that faith should be
reflected in investment practices while the other one had no
opinion on this issue. However, the two saw all the RI
approaches as appropriate practices; they just did not
practice them. They both believed that there were not
enough financial products to reflect their religious beliefs in
their organisations’ investments. One said that it was not
possible to design an investment approach that reflected
their religious beliefs. Even if it is not statistically signif-
icant, it is interesting to note that the two respondents were
the two sole Jewish respondents. It might indicate a lack of
financial products that can accommodate Jewish beliefs, or
that Jewish investors fail to provide guidance on what
financial products should entail.
Table 2provides an overview of the most common
practices (negative and positive screens, engagement and
impact investing projects) among the religious organisa-
tions that responded to our survey. The next paragraphs
detail those practices.
8
For those interested in an extensive annotated bibliography of
academic studies on this topic, see the website maintained by the
Center for Responsible Business, sristudies.org (www.sristudies.org).
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Negative Screens
According to the survey, the negative screens most used by
religious organisations are the following: nuclear weapons
(70%), military armaments (68%), tobacco (62%), pornog-
raphy (60%) and abortion (51%). Screens such as human
rights violations (50%) and related topics such as slave or
child labour (44 and 40%, respectively) were slightly less
used. About 13% of respondents did not use any negative
screening, which aligned with the response earlier in the
survey where 86% of respondents indicated that they avoid
investing in companies whose activities or products were
considered inappropriate. It is important to note that the reli-
gious organisations not using those negative screens might
well be engaging on those issues with the companies through
other means such as, for example, shareholder engagement.
Indeed, negative screening is only oneof the strategies to exert
pressures or voice concerns with the companies.
Although it was not part of the survey, these results raise
an interesting question with regard to where the criteria for
negative screening come from in the case of religious or-
ganisations. Through the focus groups we conducted, our
exchanges with 3iG team and some of its members com-
bined with Internet search, we can provide some elements
of answer. For the Catholic tradition, negative screening of
activities related to arms, tobacco and human rights vio-
lations is derived from its ‘understanding [of] the common
good and wellbeing of people and society’. The Catholic
Missionary Oblates of the Mary Immaculate exclude
7–10% of the US stock-listed companies based on these
principles. They emphasised that not only the Holy
Scriptures themselves have led them to those screening
results but also ‘reflections and contemplations’ published
by the Vatican Catechism and Compendium played an
important role in their decision-making process (Compen-
dium of the Catechism of the Catholic Church 2005; Cat-
echism of the Catholic Church 1993).
One of the Jewish representatives we talked to high-
lighted the following: ‘We need to take every reasonable
step to make sure that the things we own do no harm’
(Rabbi Mordechai Leibling, cited in 3iG, 15th November
2007). According to him, this can be regarded as the Jewish
reasoning for screening. For example, the Jewish religious
institution Shoresh Charitable Trust excludes hedge funds
based on the Jewish ban on gambling. Concrete guidelines
on negative screening are also found at the Methodist
social principles that state: ‘Trade and investment should
be based on rules that support the dignity of the human
person, a clean environment and our common humanity.
Trade agreements must include mechanisms to enforce
labour rights and human rights as well as environmental
standards’ (The Economic Community 2008).
Our discussions with religious organisations active in
responsible investment have also revealed that many of
them apply negative screening based on their religious
principles but that it is not always straight forward and
easy. On the contrary, many of them highlighted the many
dilemmas they were facing in the implementation of the
criteria and the complex, sometimes stretched link between
criteria and faith principles. Pornography may be one of
those difficult screens. One may want to distinguish
between the making and the selling of pornography. It may
be rather easy to exclude companies on the pornography-
making criteria, but much not so obvious when considering
pornography selling which is the case in the hotel industry.
The exact percentage of revenues derived from pornogra-
phy selling is often hard to find and companies are not
transparent about it.
Comparing our results with the negative screens used by
the secular responsible investment community revealed a
variation in interests. According to different studies, the
secular RI community has shifted from focusing highly on
tobacco and gambling in 2003 (US SIF 2001) to screening
on weapons in 2008 (Eurosif 2008). In 2008, ‘norms-based
screening’ was in the second position; according to this
approach, the yardstick is companies’ compliance with
international standards and norms such as those issued by
OECD, ILO, UN, UNICEF, etc. It might come as a surprise
that religious investors focus less on norms-based screen-
ing. On average, they showed less concern about human
rights violations, slave labour and child labour (45%) than
tobacco (62%), pornography (60%), abortion (50%) and
gambling (46%). Although 60% of the religious investors
screen for pornography (#4 on the list), pornography is less
Table 2 The most common screens, engagement practices and impact investing areas used by religious organisations
Negative screens Positive screens Engagement Impact investing
1. Nuclear weapons 1. Environmental policy and programmes 1. Proxy voting 1. Community development
2. Military armaments 2. Employee welfare and rights 2. Writing letters 2. Micro-finance
3. Tobacco 3. Diversity and inclusion 3. Shareholder resolutions filing 3. Affordable housing
4. Pornography 4. Transparency 4. Having meetings with company’s
representatives
4. Fair trade
5. Abortion 5. Supply chain labour practices 5. Divesting 5. Clean energy or environmental
management
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vital for secular responsible investors and it is not found in
the top 5 exclusionary screens most commonly used by
secular responsible investors (US SIF 2001).
In short, the secular RI community and religious orga-
nisation have a common negative screen, namely, the
weapon industry. But their priorities are slightly different
on other screens: The religious organisations focus more on
avoiding certain products and services, whereas the secular
RI community focuses on norms-based screening.
Positive Screens
When asked what positive criteria religious organisations
used (investing in companies that show evidence of corpo-
rate social responsibility), environmental policy and pro-
grams was the screen mentioned most frequently (by 61% of
the respondents). Employee welfare and rights was the sec-
ond most important positive screen with more than 50% of
the respondents using it. About 21% of respondents did not
use positive screens. These results are not entirely surprising
as various Holy Scriptures refer to environment, human
welfare and human rights, social justice and good steward-
ship or as Rev. Dr. Se
´amus P. Finn puts it ‘each religious
tradition has as horizon of reference the human-divine, the
human-human and the human-earth relationships’ (Finn
2010). Indeed, already in 1970, Pope Paul VI (1970) had
mentioned the ecological problem together with unem-
ployment and discrimination among others as some of the
main challenges of post-industrial society (Rossetti 2005).
When comparing positive screens to the secular RI com-
munity, we can notice that environmental concerns are also
the most used positive criteria in Europe, while employee
issues come third (SRI Compass 2003). This suggests that
there are few differences in positive screening between the
secular RI community and religious organisations.
Impact Investing
Respondents were asked several questions related to
impact investing. A first question was about the type of
projects they support through impact investing. Commu-
nity development (53%), micro-finance (47%) and afford-
able housing (42%) were the most frequently used types of
impact investing projects. Perhaps surprisingly religious
investors were far less involved in health (17%), agricul-
ture (15%) or forestry (7%) and 23% did not practice
impact investing at all. Some religious organisations have a
very broad approach to impact investing. For example, the
Church of Norway’ impact investing policy strongly
focuses on enterprises that have micro-finance as one of
their business areas, and in enterprises whose policy is to
promote fair trade or to make direct investment in devel-
oping countries (Opplysningsvesenets Fond 2003).
We then asked religious organisations about the return
rate of impact investing. More precisely, we asked whether
they were ready to accept below market rate for this spe-
cific type of investment. Although six respondents men-
tioned that impact investing did not give a below market
rate return, almost one third of religious investors men-
tioned that 10% of their impact investments gave a lower
rate of return. Eight respondents accepted a lower rate of
return for all their impact investing. Oddly enough, 33% of
respondents did not know what percentage of their orga-
nisation’s impact investing yielded a lower market rate
return. This seems to suggest that, at least for now, many
religious organisations do not subject impact investing to
the same degree of financial scrutiny as they do with other
types of investments.
Finally, we asked participants about the value of their
assets currently invested in impact investing. The survey
mentioned figures in Euros and the exchange value in US
Dollars. A big difference in asset allocation was observed
in this connection, ranging from 22% investing less than
half a million Euros (less than 0.73 million US$) to 9%
investing more than 50 million Euros (more than
73.3 million US$). In addition, a rather large number of
respondents preferred not to disclose the figures (13%) or
did not know how much their institution invested in impact
investing (14%).
Overall, despite these differences, impact investing was
widely practiced among religious investors. This is in line
with studies by 3iG (3iG 2010a,b). Religious investors
seem to be pioneering this new development in the RI field.
Shareholder Engagement
As already suggested by previous answers to this survey,
there seems to be a strong belief among religious investors
that they should be active shareholders. Mainly legislative
tools and shareholder–management communication were
thought to be appropriate. Several respondents indicated
that they practiced shareholder engagement through reli-
gious investor groups. For example, the services of or-
ganisations, such as ICCR in the USA or the German
Catholic Bishops’ Organisation for Development Cooper-
ation in Europe, are used by religious organisations to
exercise their shareholder rights. Proxy voting, writing
letters and shareholder resolutions filing were used by more
than 50% of respondents. About 13% did not engage as
shareholders.
Shareholder engagement practices are quite diverse
among religious institutions. For example, the General
Board of Pension and Health Benefits of The United
Methodist Church (GBOPHB) and the Missionary Oblates
of the Mary Immaculate (OMI) practice active shareholder
engagement (interview with Mrs V. Bullock, Board
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member of GBOPHB and Rev. S. Finn, Board member of
OMI and 3iG Board). They do it both directly and through
a religious investor group. In most of the cases, the
GBOPHB proceeds as follow: When an issue comes up, the
GBOPHB first writes a letter to the company or companies
concerned to ask for clarification on the policies and
practices in regard to the issue. If the company does not
want to be cooperative, the next step is to meet company’s
representatives to discuss the issue more in-depth. In case
the company does not reply or provides an insufficient
response, GBOPHB files a shareholder resolution to for-
mally begin the active shareholding process. This resolu-
tion is either filed by GBOPHB directly or through
organisations such as ICCR for Food and Water sector and
Labour standards; Ceres for Environment and Climate
related issues; and Social Investment Forum. Finally, if the
discussion with the company is not fruitful or if they do not
show any response, GBOPHB raises the issue at the
company’ Annual General Meeting. As for the OMI, res-
olutions are used only if the issues are not solved through
dialogue with the companies. Meetings might be ongoing
for 3–4 years before resolutions are made, which is the
case with the mining industry for example. The OMI
withdraws its resolution if they feel that the discussions
with the management are developing positively.
According to the Eurosif (2008) annual survey, proxy
voting is also the most common form of engagement
among the secular RI community (more than 40%), fol-
lowed by direct private engagement (including writing
letters and holding meetings with company representa-
tives). However, comparing the Eurosif study with our
survey, direct engagement and filing shareholder resolu-
tions would be significantly less used by the secular RI
community (10–15%) than by religious organisations (56
and 50%).
Once again those results have to be understood in light
of our sample which is dominantly based in North Amer-
ica. As other studies have shown, North America especially
the USA has a longer history of shareholder activism and is
more inclined to engage as shareholders (Louche and Ly-
denberg 2006).
Research Process
Practicing FCI requires religious organisations not only to
develop criteria and policies but also to collect information
about companies’ activities, practices and behaviour.
Through our interviews and focus groups, we found two
important characteristics with regard to the research pro-
cess. First, the religious organisation representatives we
have talked to were in general very reticent in using
company’s public reports. They favour other independent
sources. For example, important and decisive sources of
information for the Jewish Shoresh Charitable Trust are
‘reputable’ newspapers and information given by asset
managers.
Second, similarly to the secular responsible investment
community, some religious organisations use the services
of social rating agencies such as, for example, KLD, Sus-
tainalytics, Riskmetrics, ISS, EIRIS and others. For
example, the Methodists Board of Pensions and Mary
Oblates in the USA use the screenings from KLD. How-
ever, independent rating organisations are mainly used by
large religious organisations. Religious organisations with
a smaller investment portfolio tend to use other sources
such as the media information.
In general, the research process used by religious
organisation remains rather obscure. Religious organisa-
tions’ websites do not provide extended information on
their methodology and methods for screening companies.
Even the methodology used for the STOXX Europe
Christian Index provides little information.
Barriers/Facilitators
The survey clearly pointed out that in general respondents
tended to reflect their beliefs in their investment practises.
However, to what extent is this possible? Are there any
barriers or facilitators to practicing faith consistent
investing? We are going to explore these questions with a
special focus on the barriers in this part of our analysis.
Religious organisations were enquired whether religious
beliefs were reflected in investment approaches on a scale
from 1 to 7, where 1 meant that their religious beliefs were
not reflected at all in their investment approach, whereas 7
meant a high connection between the two. The average
response was high, 5.46, which is rather high. And almost
all of them agreed that it was possible to design an
investment strategy that aligned with their religious prin-
ciples (only 7% disagreed on this statement). Yet, when
entering more into details, religious organisations men-
tioned that they encountered various obstacles in trying to
put faith consistent investing into practice. They would
actually be inclined to invest more according to their faith
beliefs if certain tools and services were available to them.
About 37% of the respondents felt that changing existing
investment practices of the mainstream investment com-
munity is something difficult. However, integrating reli-
gious principles or CSR dimensions requires changes and
adjustments (Louche and Lydenberg 2011). The invest-
ment community is engrained in a strong and dominant
logic which may be highly resistant to change. If religious
organisations wish to add criteria or innovate in terms of
investment strategy, to better align their principles of faith
to their investment practices, it may well be difficult to get
heard by the financial community and even more difficult
From Preaching to Investing Attitudes of Religious Organisations 313
123
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to get religious organisations’ requirements or demands
implemented. However, when responding to the question
on their power of influence with regard to investment
strategy, only a small minority (8%) believed they could
not exert any influence. Our results showed a small con-
tradiction that would be worthwhile to explore further. On
one hand, religious organisations felt it is difficult to
change existing practices, but on the other hand, they felt
they did have certain power on investment decisions. Note
that 50% of the respondents followed the advice of their
financial advisor. This highlights the potential key role of
financial advisors in the investment process of religious
organisations but also in changing mainstream finance.
To better understand the obstacles and impediments for
changing existing investment practices, the participants had
to react to several statements. In general, there seemed to
be a great need for a less complex investment market with
tools and services more appropriate for religious invest-
ment purposes. About 29% of respondents felt that
investing was so complicated that it was difficult to com-
prehend all the products and tools that were offered and
26% mentioned that there was a lack of financial products
enabling their organisations to reflect their religious beliefs
in their investments. Indeed, two respondents said that it
was not possible to design an investment approach that
reflected their religious beliefs.
In the survey, we also asked religious organisations what
support was needed to make investments more faith con-
sistent. About 50% of the respondents mentioned they
would significantly increase their investments (assuming
they had the necessary financial resources) if their invest-
ment manager were able to offer an option for aligning
investments with their religious beliefs. Furthermore, 51%
said they would be inclined to invest more if there were
reliable tools for developing and maintaining an investment
fund that reflected their religious beliefs.
When asked what evidences were required to increase
investments in a faith consistent way, several religious
organisations focused more on evidence of a positive
impact on society and on company behaviour rather than
on avoiding the risk of poor financial performance.
Overall, there seem to be some difficulties in putting
religious beliefs into investment practice. Religious organ-
isations cannot implement faith consistent investing alone;
they depend on the offerings of financial institutions. The
current investment market is not fully equipped or willing to
provide tools and services that are required by religious
organisations. Religious organisations also require a less
complex investment market. Customised religious invest-
ment products could attain this. Customisation and simpli-
fication would attract more religious money into the global
responsible investment market. However, religious organi-
sations are not a homogenous group. They represent many
religions with each its own and different requirements that
can probably not be translated in one single tool but rather
requires a variety of approaches.
Regional Differences
Although no significant differences were noticed in the
opinions of US versus non-US respondents, the practices
differed between the two groups. Our sample consisted of
61% religious organisations based in the United States of
America and 39% from elsewhere around the world.
When looking at differences in practices, some topics
should be highlighted. The first focus was on negative
screening. US religious investors placed greater emphasis
on abortion (60 USA vs. 41% non-USA), whereas por-
nography was a more important exclusionary screen among
the non-US respondents than among US respondents (54
USA vs. 67% non-USA) (see Table 3).
When looking at the usage of positive screens, US-based
religious investors were more interested in diversity and
inclusion than non-US investors (58 vs. 39%) but were less
concerned with transparency than non-US religious inves-
tors (31 vs. 48%) (see Table 4). Furthermore, US respon-
dents generally showed more interest in positive screening
than did non-US ones.
When it comes to impact investing, the differences
between US-based religious investors and non-US religious
investors were sharper. More than double, the US-based
respondents practiced community development (71% in the
USA vs. 33% non-USA) and affordable housing (60 vs.
22%) than non-USA, whereas non-US respondents formed
the majority of investors in clean energy or environmental
management (see Table 5).
Table 3 Tope 5 negative screening practices USA/versus non-USA
USA Non-USA
1. Nuclear weapons 1. Pornography
2. Military armaments 2. Military armaments
3. Tobacco 3. Nuclear weapons
4. Abortion 4. Tobacco
5. Pornography 5. Abortion
Table 4 Tope 4 positive screening practices USA versus non-USA
USA Non-USA
1. Diversity and inclusion 1. Employee welfare and rights
2. Employee welfare and rights 2. Transparency
3. Supply chain labour practices 3. Diversity and inclusion
4. Transparency 4. Supply chain labour practices
314 C. Louche et al.
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The value of religious organisations’ asset allocation to
impact investing varied widely. Some respondents did not
know; this went for 7 out of 43 US-based investors and 3
out of 26 non-US-based investors. Nine US-based
respondents indicated they did not disclose information on
impact investing asset allocation. Although the opinions of
religious organisations towards investment practices in the
USA and outside the USA did not differ significantly, there
were interesting regional differences in practices.
Conclusion and Discussion
The aim of this article was to study faith consistent
investing. In this process, we investigated religious or-
ganisations’ attitudes towards responsible investing. We
more especially explored religious organisations’ opinion
about investing, their investment practices and the potential
impediments for matching faith beliefs and investing.
To examine those questions, we conducted a survey
among religious organisations. Given the growing interest
in responsible investment, the fact that religious organisa-
tions are possibly, when taken together, the third largest
group of investors in the world but also the exemplary,
educational and advisory role these organisations play for
their members, this survey contributes in shedding light on
a research field of a major importance. In light of the
results of the survey, six main findings are presented.
Thereafter, we provide some potential directions for further
research.
Main Findings
Faith Consistent Investing is Possible
Religious organisations do not see any contradiction
between the activity of investing and religion. Investing is
a fully accepted activity as long as it is done respecting
faith beliefs. The faith dimension is a factor that increases
the religious organisations’ sensitivity and awareness
towards the non-financial impact of their investment
activities. The research also highlights a certain alignment
between religious organisations’ beliefs and actions. The
responses show that faith consistent investing is highly
practiced. Nonetheless, we ought to put the results into
perspective, as our sample is not fully representative of the
religious organisations community and biased towards or-
ganisations that are already active in FCI.
Beyond Financials
Our results highlight the fact that religious organisations go
beyond the financial aspects of investing. They seem to be
highly driven by the impact they can have on companies’
behaviour or society and therefore do not limit the purpose
of investing to purely financial returns. As noted by Rev.
Dr. Se
´amus P. Finn in his oration to the Ninth Harvard
University Forum on Islamic Finance (March 27, 2010):
‘Faith traditions provide both the principles and the moral
compass to evaluate a financial system in terms of its
contribution to the well-being and future of both people
and planet’ (Finn 2010). Although important, the market-
rate returns did not come out as a determining factor to
increase their investments but rather as a minimum
requirement. However, the tensions between the finances
and the principles seem to remain a critical debate and to
pose dilemmas for religious organisations, as much as
within the financial community where there is not yet a
clear answer.
Religious Investor Identity
An interesting characteristic of FCI is that religious
investors have set up their own specific networks where
only (or dominantly) religious organisations are members.
Although a few of them have joined secular RI networks,
such as the UNPRI, most of the religious organisations
limit their membership to FCI networks. Is it for historical
reasons? Is it related to divergent views on RI? Is it a
search or a need to strengthen an ‘identity’? Our results do
not allow us to give a full explanation. However, we can
hypothesise some elements for an answer. There are
probably organisational reasons related to the way religious
organisations operate and are structured. There are most
probably reasons related to some principles that may be felt
as stronger and sharper among religious organisations.
Cultural reasons can also play a role as religious organi-
sations may share a vocabulary, worldview and ways of
working, which distinguishes them from secular RI actors.
But maybe more importantly religious organisations can be
regarded as collective of multiple organisations or indi-
viduals who are conscious of forming a group (Rowley and
Moldoveanu 2003) and with a collective identity that
articulates their shared interests and goals (Klandermans
1984). Certainly, more research is necessary to find out
why there are not only different but also separate networks
for FCI and secular RI.
Table 5 Tope 4 impact investing activities USA versus non-USA
USA Non-USA
1. Community
development
1. Clean energy and environmental
management
2. Micro-finance 2. Micro-finance
3. Affordable housing 3. Community development
4. Fair trade 4. Affordable housing
From Preaching to Investing Attitudes of Religious Organisations 315
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Yet although religious organisations have created their
own networks, it seems that the practice of RI does not
differ significantly from those of the secular RI community,
for example, in terms of the negative screens used or the
engagement practices. The reason for this might be the
absence of specific religious-based financial tools and
services compared with the availability of secular RI
products. Another potential reason, and an interesting line
for further research, is that the secular RI community is
more religiously inspired than it might realise.
Impact Investing Revitalised
Impact investing has been practiced by religious organi-
sations for a very long time. Indeed, impact investing may
be an investment activity that best fits religious organisa-
tions’ principles and objectives. The interest of religious
organisations for impact investing comes from the fact that
they have a slight preference for investing in projects or
companies that do a clear a direct social good, rather than
adopting ‘best-in-class approaches’ (i.e., they ‘choose the
best within the limitations of capitalism’). Therefore,
impact investing comes as an activity with fewer ideolog-
ical tensions than other FCI practices.
This is quite well illustrated by the vision of the Jewish
values-based investment guide: ‘Money is not merely a
means to increasing wealth, but can itself be a way to
advance important social goals. In Jewish tradition, the
highest form of charity is to make a business partnership
with a potentially needy person; conversely, investments
that patently promote antisocial activities are prohibited’
(Meir 2009). However, in the past, impact investing was
never defined as a responsible investment activity. It is
only recently that it has been slightly reshaped and rede-
fined to enter the field of responsible investment. On one
hand, it is being revitalised among religious institutions,
and on the other hand, it is emerging as an interesting field
among mainstream financial institutions. One may ask
whether, once again, religious organisations are pioneering
a new development in this area of investment. This leads to
the question of whether religious organisations can foster
change in the financial system or play the role of ‘norm
entrepreneurs’. Norm entrepreneurs are actors who seek to
actively persuade other actors that a new norm is superior
to the existing standard of appropriateness (Sjo
¨stro
¨m
2010).
Beliefs Versus Practices
Practicing FCI does not come out as an easy and
straightforward activity. Indeed, our research points at
some impediments. Religious organisations cannot imple-
ment faith consistent investing alone; they depend on the
offerings of financial institutions. If the investment market
does not provide tools and services integrating the needs
and requirements of religious organisations, it makes it
difficult or almost impossible to fully practice FCI. Our
research also highlighted that religious organisations do not
always managed their investment by themselves alone, but
do it in collaboration with a financial manager. Another
hurdle is then to convince the financial manager to apply
and respect the religious principles in the investment
activity. Whether financial managers have the right
incentives and the adequate skills to do so remains an open
question. Our research also showed that religious organi-
sations often find investment products too complex and
therefore difficult to fully comprehend and maybe to
control.
Because of different principles of faith, customisation is
another issue that could facilitate FCI and attract religious
organisations to practice it. This leads to another debate,
outside the scope of this study, about common and
diverging principles among the different religions. Some
argue that there are ‘root differences’ between religions
(Fehrenbacher 2001) and others claim that there is a greater
commonality of religious values as opposed to other types
of values, for example, national values (Inglehart and
Baker 2000). Furthermore, it remains crucial to raise the
question of whether all religious principles are applicable
and should be implemented in investment activities. Our
research already triggered questions on controversial con-
sequences of integrating faith beliefs in investing. For
example, certain religious funds screen out companies on
behalf of their religious principles such as Wyeth for
manufacturing birth control pills, Merck & Company for
foetal tissue research, Procter & Gamble for donating to
Planned Parenthood and Amazon.com for officially rec-
ognising gay and lesbian groups. It raises the questions of
the universality of the principles and the purpose or the
objectives of using certain screens. Those questions are
certainly not limited to FCI but might be more pressing
with regard to specific criteria like the ones mentioned
above.
Regional Differences
Although there are no major differences between religious
organisations in the USA and outside the USA, some
variations are worth mentioning. When excluding products
and services, USA religious investors placed more
emphasis on abortion than non-US religious investors,
whereas pornography was screened more by non-US reli-
gious investors. Of the positive screens, diversity and
inclusion was relatively more important in the USA,
whereas non-US religious investors focused more on
transparency than USA ones. Evidence on impact investing
316 C. Louche et al.
123
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research showed a significant higher interest in community
development and affordable housing by the US investors.
Finally, US religious investors practiced impact investing
more than their religious co-investors outside the USA do.
Again, more research is needed on regional differences as
well as on intra and inter-religion. The characteristics of
our sample limited our capacity to carry a comparative
analysis.
Directions for Further Research
This study provides important insights into faith consistent
investing. Despite having historically pioneered many RI
initiatives, little is known on religious institutions’ beliefs
and practices towards investing today and FCI. This survey
is a major contribution to this under-researched field. It can
serve as a basis for further research, as we highlight in the
following.
Our study highlights regional differences between US
and non-US religious organisation. However, the scope of
our sample did not allow us to fully investigate those dif-
ferences and especially did not allow going more into
details into the different regions. But we have strong
indications that religious organisations do not have the
same FCI practices in the different regions of the world. It
would be valuable to study more in-depth those geo-
graphical differences around the world. There are also
inter- and intra-religious differences that are worth study-
ing. Although it was not the objective of our survey to
study intra-religious differences, our discussions with
religious organisations revealed that within a same reli-
gious group views differ. For example, the creation of the
STOXX Europe Christian Index in 2010 was an intense and
sometimes difficult process to come up to an agreement on
the criteria that should be applied.
The survey provides an overview of the religious or-
ganisations FCI practices but many questions remain and
further research is required to better understand those
practices. We would especially make a call for more
research on two specific activities, namely, impact investing
and shareholder engagement. More fine-grained research is
needed on how they are practiced, the drivers for practicing
those activities but also in terms of the impact they have.
The relationship between religious values and invest-
ment strategy needs be better understood. Obviously, the
religious organisations of our sample and the ones we talked
to tried to link their investment practices with their religious
principles. But the link is not always obvious and the
articulation values and investment practices remain rela-
tively unsophisticated and vague. For example, one could
ask what exact religious conviction determines the exclu-
sion of tobacco. Furthermore, a variety of other factors,
next to religious values, most probably affect investment
strategies and affect the influence of those values. A more
qualitative research based on interview and discourse
analysis could help to better understand and characterise
this relation.
The decision-making process with regard to investment
policy but also to the final investment decisions remain a
black box. Little is known about who sets the investment
policy and who has the decision power within religious
organisations. A previous study (Ross 2005) showed that
financial issues remain a topic of ‘fear’ among religious
actors and for an important part delegated to external
professional advisers. The importance of the external
advisers is also something we noticed in our survey. This
black box needs to be open to better understand the deci-
sion-making process with regard to FCI and the factors that
influence those decisions.
Finally, the article raises the issue of identity for FCI
and the FCI network. As highlighted in the results, reli-
gious organisations have their own networks and do not
seem to mix with the RI community. A promising line of
research would be to use social movement theory, as it has
been suggested by Arjalies (2010), to explore the group
dynamics of religious organisations practicing FCI and
how they are affecting and are affected (or not) by the
broader responsible investment community.
Acknowledgments We would like to thank the International
Interfaith Investment Group (3iG) for making this research possible.
They have helped us both in terms of financial resources, networks
and content. We would also like to thank the Interfaith Center for
Corporate Responsibility, the Ecumenical Council on Corporate
Responsibility, Oikocredit and SHARE for providing access to their
networks.
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