Banking on values, not just value, matters for society and ecology.
What do the Archbishop of Canterbury and a fairly ruthless payday-loans company, Wonga, have in common? Quite a lot actually, as it turns out. For a start, they recently shared the media spotlight as Justin Welby announced, very commendably, that the Church of England would use its considerable resources to offer alternative forms of financial advice and support to people that did not involve fleecing them with scandalous rates of interest. Archbishop Welby declared that he wanted to ‘compete [Wonga] out of existence’. Almost immediately it transpired, however, that there were also less exalted links between Wonga, the Archbishop and the wider Church of England via its pension fund, albeit through a relatively minor and indirect investment. The righteousness of Welby’s war on Wonga remained but the incident highlighted the challenges of matching values with investments, and the reputational risks of getting it wrong.
Nor is the trend confined to this particular incident. An influential and well-respected Christian organisation that I used to work for also found mismatches between its money and its mouth. It had, quite rightly, publicly criticised two multinational corporations for serious and flagrant breaches of international norms. But it turned out that one of the companies was in the charity’s standard pension fund, part of which tracked the FTSE All-Share, i.e all the 600-odd companies listed on the London Stock Exchange. The other was in its ethical pension fund, which tracked the FTSE4Good UK index, a sub-set of the corporations listed on the same exchange, but with certain minimum ethical standards.
This is not a criticism of the organisation in question. My pension is still with its ‘ethical’ pension fund. In fact, most Western Christians with pensions, and most Western Christian organisations with pension schemes, probably have similar investments in similar companies. That is just the way stock markets and most pensions operate. Nor is this an exercise in corporation-bashing. Whatever the ethics of particular organisations, there are still many good people – including Christians – working for the companies listed on the London, and other, stock exchanges. But like with Welby and Wonga, this story also highlights the complexities, challenges and risks of matching our pensions with our principles.
But what on earth does any of this have to do with the environment? Plus if it’s all so complicated, is there anything that can be done by ordinary people about changing investment patterns? This blog examines these questions, beginning with a reappraisal of the role of money itself.
Money makes the world go round, some claim. While it may not buy happiness, it certainly makes misery comfortable, quip others. In fact, money, like many other things in life – such as science and technology – is a neutral tool that can be used for good or evil. On one hand, 1st Timothy 6:10 famously reminds us that the ‘love of money is the root of all kinds of evil.’ On the other hand, most people in the world need it to purchase everyday essentials and many Christians give generously of it to the Church, charities, and the like. The parable of the talents, from Matthew 25, also demonstrates that all gifts given by God, financial or otherwise, should be carefully stewarded and invested to give a return.
The problem with conventional investment, however, and with money in general, is that it tends to produce very narrow, and often short-term, measures of value. The real worth of a rainforest, for instance, cannot just be measured by the market price of its timber. Yet often investments and loans by banks and pension funds do just that. They prioritise short-term financial results over longer-term, social and environmental benefits, turning community farmland into private plantations, boreal forest into tar sands, and rainforests into toilet paper.
The thing is rainforests, and other ecosystems, also have numerous other practical roles, such as water and climate regulation, whose essential economic contribution can only be estimated. Most of the time they are also home to various people groups, though sometimes without the political power or title deeds necessary to protect their land and interests. What’s more they are literally bursting at the seams with intrinsic wealth, like beauty and biodiversity, that doesn’t show up on a balance sheet. In much the same way, we cannot expect the true happiness and success of a society to be measured by GDP alone. There are simply too many things that money cannot value, let alone buy.
What this means for our banking and investing is that we cannot take the financial return on our money as the only measure of investment success. In fact, we should be actively seeking places for our spare cash that try to account for their social and environmental benefits, as well as their economic, even if that means a slightly lower, or longer, payback rate. This triple-bottom line accounting involves bringing our financial decisions into line with broader biblical principles of love, generosity and justice, as well as financial responsibility. It means surrendering yet another part of our lives to God’s way of doing things, rather than society’s. As with the two examples mentioned at the start of this blog, it may also mean rooting out particular companies, or even entire sectors, whose practices – of cashing in valuable social and environmental assets to make a quick buck – clash with our Christian principles .
Investment screening like this is the first of three stages in ethical investment. Most pension companies will have an ethical pension fund that meets certain minimum, if sometimes arbitrary, social and environmental criteria. The second stage is shareholder advocacy. More enlightened financial institutions, such as the Co-operative Bank, will often have proactive engagement strategies with companies in which they hold stock. Given the size and reach of multinational corporations, a small policy change in a particular area of their operations can have big results. Thirdly, impact investing seeks to put money into initiatives that are often outside of the stock market and which have a particular focus on triple-bottom line returns: environmental, social and economic. Triodos Bank and Oikocredit are two excellent examples of such sustainable finance in action, the latter with a strong Christian foundation.
Two years ago my wife and I switched our savings to an ethical provider and last year we switched our current account. Our pension, and eventually our mortgage, is next in line for an overhaul. The Move your Money campaign is a good place to find out more about all of these. Ana Quindlen said that ‘the purse is the mirror of the soul’. Let’s make sure our pension and investment purses truly are mirroring our souls. Let’s joyfully invest with our values, not just value, and try our best to put our money where our mouth is. Society, and the ecology that underpins it, is banking on it.
Gloria in excelsis Deo.