Treasure in heaven and on earth?

by
28 September 2018

As Good Money Week approaches, Ted Harrison looks at ethical finance

istock

Investing in shares in companies developing renewable energy is being enouraged

Investing in shares in companies developing renewable energy is being enouraged

THE Apostle Paul, in 1 Timothy 6.10, teaches that “The love of money is the root of all kinds of evil.” In Luke 16.13, St Luke records Jesus as saying: “You cannot serve God and money.” And, in chapter 5 of St James’s epistle, the wealthy are told to “weep and wail” over the miserable fate that awaits them.

It might be supposed that the Bible has little good to say about money. Indeed, Jesus’s advice to the rich young man was to sell all that he had, and give his money away. But scripture also recognises the reality of money, and, in several sections of the Old Testament, advice is given on the fair and responsible use of wealth.

So, the annual Good Money Week (29 September to 5 October this year) need not be seen by Christians as a contradiction in terms. Formerly known as National Ethical Investment Week, it seeks to raise awareness of a more sustainable, responsible, and ethical approach to banking, pensions, savings, and investments.

At one time, ethical investment was of peripheral importance; today, it is a mainstream option, and big business, too. Once, it meant avoiding funds that profited from activities of dubious morality; today, advocates of ethical finance focus on using money to make a positive impact on the environment and society.

”Socially responsible investing” is the current term used, Jon Cobb, of Trinity Wealth Management, a firm of Christian financial advisers based in St Albans, says. “God owns it all; we are the stewards.” Trinity advises some church trusts, but, predominantly, its clientele consists of individuals who wish to use their wealth wisely and within biblical principles: “We can offer financial advice that takes into account lifestyle, goals, and dreams, and what God might be calling you to do.”

istockGood Money Week is promoting investment in environmentally-friendly industries, including electric vehicles like this one, recharging in a London street

Conventional investments can be judged by their monetary return and how they perform in relation to various indices. Gauging how an investment performs socially is far harder. Gavin Francis, of Worthstone, a specialist company assessing social impact, says “There is no agreed way of measuring. There’s a lot of subjectivity still involved.” Progress can be measured against the 17 UN sustainable-development goals, he says, but investors need to ask what their own interests are. “Do they want to see their money used, say, to provide employment, improve sanitation, alleviate poverty?”

Mr Francis is motivated in his work by his Christian faith. Ideally, he says, when financial advisers sit down with clients, they won’t just discuss tax, percentage returns, and risk, but it will be standard practice to talk about social aims as well. His advice to any individual or group is to consider how their wealth might be used to the wider good. “Conventionally, people thought of financial planning and charitable giving as money in two separate pots. Actually, the two can be seen as one.”

 

THE UK Sustainable Investment and Finance Association is the umbrella organisation promoting Good Money Week, and the participants include charities, secular organisations, and churches. They range from ethical investment funds, such as Ethex, to both the Church of England and the Church of Scotland. Sponsors also include large banks and investment funds.

Good Money Week is aimed at several target audiences. It wants charities and churches to be aware of how best to invest within an ethical framework. This is not just for altruistic reasons. Charities stand to lose supporters and income if they do not ensure that they invest their assets in line with their purpose. Resent research for Good Money Week by YouGov found that 77 per cent of the British public would withhold donations if they found out that a charity had invested contrary to its mission.

This sector of ethical investment is growing considerably. “More and more clients are seeking alignment between their investments and their values,” Mr Francis says.

Good Money Week is also targeting professional financial advisers, by promoting what it calls the business benefits of “good money” through investing in growing industries: such as renewable energy, electric vehicles, cyber security, or meat alternatives.

Similarly, Good Money Week seeks to raise awareness among ordinary citizens with savings and pensions who wish to live according to ethical principles. A single investor — even one wanting to put limited savings into a safe ISA — can opt for the ethical option without losing out on income. Last year, £1 billion was invested in ethical ISA funds.

istockInvesting in the growing alternatives-to-meat market is another area of potential growth, which will also help the planet

TRIODOS BANK, which promotes ethical investment as its distinctive feature, offers ISAs at set rates that are on a par with the main high-street banks and building societies. The bank publishes details of every organisation it lends to.

ISAs are also available to back specific projects: Abundance Investment funds green-energy projects; and Lendahand Ethex Ltd backs solar energy projects for families in sub-Saharan Africa. Such specifically targeted investments, however, cannot guarantee returns, and are not protected by the Financial Services Compensation Scheme.

Triodos has recently given investors an opportunity to become involved in crowdfunding, through its Innovative Finance ISA. Instead of relying on fund managers to choose investments, investors can select projects that they wish to support. To date, Triodos has raised £150 million this way, to fund 60 specific projects.

The priorities of individual ethical investors will cover a wide range. Some might put climate change at the top of their concerns. Others may be more interested in animal welfare, social justice, or the promotion of world peace. Funds set priorities and parameters, which can be researched by potential investors. Finance professionals might consult investment impact advisers (Trinity Wealth Management has links with Worthstone, for example).

In addition to investing with conscience, and to make a social impact, individuals can make a significant difference to society through their spending. Buying fairtrade products means that producers are not exploited. If ethically minded shoppers are aware of the origins of the items they buy, they can avoid supporting national regimes, or corporations accused of exploitation or human-rights abuses. The widespread boycott of South African goods in the 1970s contributed significantly to the end of apartheid.

The charity Green Christian is running a campaign, “Joy in Enough”, to challenge advertising and marketing that encourages the constant pursuit of more. It especially aims to engage with church groups to explore these issues. Bishop James Jones is one of the charity’s patrons. Its campaigning, he says, “helps us rise to the environmental imperative personally, prayerfully, and politically with a small ‘p’. It helps us to become the answer to our Lord’s prayer for the earthing of heaven. It has also taught me to praise God — not just for creation, but with everything that has breath.”

When the Government asked him to chair the Independent Panel on Forestry, Bishop Jones says, it was the charity that reinforced his sense that “to do so was a genuine expression of Christian mission”.

istockOne way to approach socially responsible investment is to avoid buying shares in industries an investor deems unethical, such as gambling

THE world of investment finance can be complex and confusing. Trustees and, sometimes, churches can have thousands of pounds saved and waiting to be used. They may easily be tempted, like the servant who buried his master’s talents, to put the money in a simple “no ethical questions asked” bank account.

Guidance is at hand, however, through Ethical Money Churches (EMC): an Ecumenical Council for Corporate Responsibility (ECCR) initiative that helps worshipping communities to explore the challenging issues relating to Christian stewardship.

Sabrina Groschel, from EMC, says that many churches have “rainy-day funds”. When she meets church treasurers, PCCs, and ecumenical groups, she challenges them about how those funds are invested, and how that matches their own mission. “I might ask what bank they use, that can have ethical implications,” she says.

”It is important to say here, that the project is aimed at not only churches who have a lot of money, but also those who are struggling financially. We have worked with churches who worry a lot about whether they can afford to stay open, but actually still have quite substantial reserves that they are too scared to spend.

“We encourage them to think about whether sitting on such reserves is the best thing they could do for their mission, or whether that money could be invested in a way that brings about positive change — not only to their church, but also to the wider community.”

EMC welcomes invitations from churches to run workshops reflecting on how financial decisions are made. “Usually, the starting-point for this is thinking about what we can learn about money and social responsibility from the Bible, before looking at how we implement that teaching in how we handle money as church communities.”

Discussions might lead on to individuals’ thinking about their personal finances, “although it’s not usually thought of as very British to talk about your own money”, she says. A church might consider building a Lent course on issues concerning money, debt, wealth, and justice.

istock Shares in the tobacco industry are not acceptable for Church investment bodies

INVESTMENT managers who handle millions of pounds on behalf of churches and charities have a responsibility to ensure that the money not only maintains its value in uncertain economic times, but also produces an income without compromising ethical principles.

Constant vigilance is required to monitor corporate activity across a wide spectrum of activity. A manufacturing company might outsource work to a third party that is less than scrupulous about paying fair wages; another might sell a product that is subsequently used for an unethical purpose.

Stephen Beer is the Chief Investment Officer of the Central Finance Board of the Methodist Church, and a board member of Epworth Investment Management. He oversees funds worth approximately £1.3 billion. “Epworth manages money on behalf of other church groups and charities. I look at company finances and how socially responsible they are. I also analyse issues such as human rights, and the environment, including climate change, employment conditions, executive pay, supply chains, gambling, defence, and alcohol promotion.”

Investors can take one of two approaches should they discover thattheir funds are being used unethically. They can speak out publicly when injustice is evident, and denounce companies through disinvestment; or, alternatively, work from inside, using their influence as shareholders to achieve change, as the Church of England has opted to do with its investments in Amazon (News, 21 September).

Mr Beer takes this latter approach. “We are not the prophet in the wilderness, but more those striving to be faithful where God has placed us”: less like Elijah, who denounced Queen Jezebel, and more like Obadiah, who used his position in the royal household to save the 100 prophets.

As examples of this approach, Epworth cites their positive engagement with Nestlé and Royal Dutch Shell, and how they voted at 73 UK company AGMs, opposing or abstaining when appropriate. When it came to board and executive pay, Epworth voted against 62 per cent of remuneration reports and policies.

There are opportunities, too, for investors to use their money to buy small numbers of shares in companies of which they specifically disapprove, in order to employ their shareholder rights to question the management. Groups such as Earth Quaker Acton Team have a track record in taking this approach.

Using voting power to check excessive pay awards, or to push environmental issues up a company’s agenda, is a relatively recent trend. When the first ethical policies were announced by church investors, the main concerns were to avoid investing in what were seen as the more obvious evils, such as the alcohol industry, gambling, and pornography. Later, given greater public awareness of the health dangers of smoking, the tobacco industry was added to the black list.

Today, avoiding industries that leave a heavy carbon footprint has become a priority. The current guidelines of the Ethical Investment Advisory Group (EIAG), which advises the Church of England, also counsel against investments in armaments, high-interest-rate lending, and human embryonic cloning. At the same time, official ethical policies have become more proactive, and green sustainable investments are given priority.

“We also provide advice on positive steps,” the EIAG says, “to reflect the Church’s teaching and values on a range of issues, including climate change, supply-chain ethics, and extractives industries.”

The managing director of Triodos Bank UK, Bevis Watts, says that investors are waking up to the fact that there is no such thing as a neutral investment. “Every investment has an impact on individuals, society, and the economy. The socially responsible investing market is growing quickly, but we must be careful that it isn’t just labelled as ‘sustainable investment’ on the surface. Otherwise, it might come down to just doing things slightly less badly. We encourage all investors to seek out funds . . . that apply strict sustainability criteria.”

It makes good financial sense, too, Mr Francis says. “Companies that are seeking innovative ways of meeting the UN Sustainable Development Goals will be the ones getting all the encouragement and support from governments.”

WE CANNOT continue with an economy that works so badly for so many, the Archbishop of Canterbury said recently. The wealthiest ten per cent of households own more than 900 times the wealth of the poorest ten per cent, and five times more than the bottom half of all households combined.

Attitudes are slowly changing, and the hope is that, through various initiatives, more of those in the fortunate category will realise that they can do something, through their own investments, to bring about change, and that trustees of church funds and charities with money to invest will also, increasingly, choose to make a difference through their investment choices.

Triodos calculates that the socially responsible investing market is on the cusp of momentous growth, and is set to be worth £48 billion by 2027. That is a growth of 173 per cent. The opportunities are there to be taken.

www.goodmoneyweek.com

www.trinitywealthmanagement.co.uk

www.worthstone.co.uk

www.uksif.org

www.triodos.co.uk

www.abundanceinvestment.com

www.lendahand.co.uk

www.greenchristian.org.uk

www.eccr.org.uk

www.epworthinvestment.co.uk

www.eqat.org

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