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June 20, 2014
Pope Francis Calls for Sustainable Investment to Help the Poor
    by Robert Kropp

At a symposium on impact investing held this week at the Vatican, the Pope calls on the capital markets to serve the good of humanity.


In a speech at the Vatican earlier this week, Pope Francis offered strong support for the social justice mission of sustainable investors.

"It is important that ethics once again play its due part in the world of finance and that markets serve the interests of peoples and the common good of humanity," the Pope said before an audience gathered for the Investing for the Poor symposium. "It is increasingly intolerable that financial markets are shaping the destiny of peoples rather than serving their needs, or that the few derive immense wealth from financial speculation while the many are deeply burdened by the consequences."

Instead of using the time-honored terms sustainable or socially responsible investing (SRI), the symposium chose to define itself by means of the currently fashionable term impact investing. It defined impact investing as "investments made with the intention to generate measurable social and environmental impact alongside financial return and holds great promise as a tool to serve the poor."

One would be hard pressed to differentiate that definition from the investment practices sustainable investors have engaged in for decades; in fact, an overview prepared for the symposium persists in limiting the definition of SRI to negative screening, when in reality growing numbers of sustainable investors have long since moved on to seeking positive environmental and social outcomes for their investments.

In a recent post, Cary Krosinsky of the Network for Sustainable Financial Markets warned that the funding of projects through an impact investing lens could lead to "just one more form of greenwashing."

Measuring the environmental and social impacts of business operations has become a mature practice by now, Krosinsky pointed out. "Companies need to minimize their environmental impacts, while maximizing their societal benefits, and can demonstrate progress on both, while maintaining if not maximizing financial returns," he wrote. "All companies need to pass through this lens. Impact Investing is not separate, neither is Sustainable Investing or Responsible Investing. There is only Investing."

But if the concept of impact investing encourages more high net worth individuals and foundations to consider sustainable investment instead of direct philanthropy, then its effect will have been positive.

"Impact investors are those who are conscious of the existence of serious unjust situations, instances of profound social inequality and unacceptable conditions of poverty affecting communities and entire peoples," the Pope stated in his speech. "These investors turn to financial institutes which will use their resources to promote the economic and social development of these groups through investment funds aimed at satisfying basic needs associated with agriculture, access to water, adequate housing and reasonable prices, as well as with primary health care and educational services."

Among the many speakers at the symposium were Rev. Seamus Finn of the Interfaith Center on Corporate Responsibility (ICCR); and Terry Mollner, a founder of Calvert Investments.

"Speculation on food prices is a scandal which seriously compromises access to food on the part of the poorest members of our human family," the Pope stated. "It is urgent that governments throughout the world commit themselves to developing an international framework capable of promoting a market of high impact investments, and thus to combating an economy which excludes and discards."

 

 
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