Investments which make the world rejoice

Divided we fall 

The news feels unendingly grim at the moment. Whether it is the war in Ukraine, the cost of living crises in the UK or the malaise which hangs over the global economy. Last January, amid the opulence of the Davos conference, entitled The Great Reset, the conversations centred on inequality, environmental degradation and populism. As one of my colleagues at the World Economic Forum stated: ‘One of the pillars of trust in a society is the feeling that life is getting better, not worse. But in too many economies, there is a sense that opportunities for the next generation are dwindling rather than expanding. ’The Great Reset’ was discussed by the political and financial elite as a way to address the underlying causes of our current crises. It has spawned many wild conspiracy theories but the reality is that those who led us into this crisis are unlikely to provide the solution.

Nothing left to lose

In the 1970s Milton Friedman wrote a seminal piece entitled Capitalism and Freedom in which he describes the connection between democracy and capitalism. He focused on the potential of capital to be a vehicle for freedom. This insight is powerful and yet limited, as he viewed this purely in individualist, economic terms. His statement that ’there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game’ has become a central tenet of shareholder capitalism. But I would suggest his concept of ‘freedom’ or ‘profit at all costs’ capitalism is driving inequality, environmental degradation and the breakdown of societal cohesion. Many people feel they have nothing left to lose.

Redemptive Imagination 

Investors who are motivated by their faith should have a different concept of freedom and the role that capital plays. In the Bible, freedom is not only about individual liberty but deeply connected with a just society. The prophet Isaiah expresses God’s anger at the injustice in Israel: ‘Justice is far from us, and righteousness does not reach us. We look for light, but all is darkness; for brightness, but we walk in deep shadows’ (Isaiah 59:9). He uses the Hebrew word ‘tsedeq‘ to combine justice (a system of equality and fairness) and righteousness (personal morality).

A new vision for a flourishing society is needed - one in which the economy serves the people and not the other way around. People desire communities with strong relational bonds, jobs which give dignity and certainty about the future. Instead, they often live in polluted and fragmented neighbourhoods with zero-hour contracts and no ability to save. In Judaism, this concept of transformation is known as ‘tikkun olam’. It roughly translates as ‘repairing the world’. Interestingly, it is also linked to the overcoming of idolatry. Jesus said ‘You cannot serve God and Mammon’ (Matthew 6:24). It is widely thought that Aramaic word Mammon is used, with the dual meaning of ‘wealth’ and ‘a Syrian deity, god of riches’. As people of faith we need to free ourselves from our subservience to money and reimagine the purpose of capital as an instrument for freedom and justice.

Capital = Influence

Sadly, most of the time our investment approach and portfolio as people of faith looks no different to anyone else's. When I started my first job I asked my pension adviser if he could recommend an ethical pension. ‘What’s that?’ was his response. Despite the majority of his clients being Christians, no-one had ever asked him this question. Too often our conversation focuses on the small percentage we give away and neglects the enormous amounts that we invest.  

Capital can have enormous influence. Our investment capital has the power to drive change and standards across industries, culture and communities alike. There are many problems that we face today: lack of access to clean water, polluted air, difficult jobs, diseases like cancer and Alzheimer's, infections like coronavirus, educational systems that can warp students’ minds, misinformation and confusion in the media. Every one of these problems could be fixed through shaping institutions and investing in innovative solutions.

Investment which makes the world rejoice

Faith-driven investing is an approach, not an asset class. It is not prescriptive but rather it asks, in the words of the prophet Micah, ‘What does God require of me?’ (Micah 6:8). This question can be applied across all asset classes; from public markets to venture capital to impact investing, and across the return continuum; from market-rate returns to concessional or philanthropic. For some investors it may be applying an Environmental, Social and Governance (ESG) screen across all their investments, while others might focus on innovative green technology or investing in infrastructure in Africa, and for others it might be poverty alleviation in marginalised communities. The answer may look different for each investor. 

Often we can get hung up on definitions of what faith-driven investing is or isn’t. The definition I like best comes from Eventide Asset Managers, ‘Investment which makes the world rejoice’. Do employees rejoice when they go to work every day? Do customers rejoice when they use the goods and services? Does the world rejoice and flourish because this business exists?