Adventures in Faith and Finance

What is your heartbreak? It’s an interesting choice of question to open a conversation, especially a conversation introducing the concept of Faith-First impact investing. Impact investing, at its core, is an attempt to respond to your personal heartbreak using the tools of finance and capital. What is your heartbreak? How are you trying to respond?

Adventures in Faith and Finance

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What is your heartbreak? That was the first question I was asked when I participated in the US-based, Francesco Collaborative Liveable Future Investing workshop in February 2024.

Below is the vision statement of Francesco Collaborative:
Decades ago, pioneering congregations of women religious made a bold decision to use their capital as a transformative force for good, rejecting a status quo of exploitative and extractive finance. We–the grateful inheritors of their vision for Catholic investing–are a community gathered and grounded by the Holy Spirit, which:

• Builds conviction, capacity, and companionship among those who long to live out a finance and investment practice rooted in this vision; and,

• Offers a space of hospitality and discovery for anyone seeking to explore the possibilities of capital as a force for good.

We are united as peers in building–each in our own way–an economy of solidarity, justice, repair, and ecological flourishing: an economy that breathes in the prophetic principles of Catholic Social Teaching.

I have been on quite a journey since then. That journey has brought me to the Small Giants Academy to discover more about impact investing from an Australian perspective. To my surprise, I have discovered that there is far more convergence than divergence between the Pope Francis-inspired Francesco Collaborative and a non-religious, or perhaps I should say, non-aligned organisation like Small Giants, but more on that later.

Each of us in that workshop had to answer the Heartbreak question— and no one had the slightest difficulty answering it. My answer revolved around the pain I experience when I see young people wrestling with anxiety, isolation, and a sense of helplessness in the face of climate change, but each of us had a story. Each of us has experienced that punch in the gut when, for some, something feels so wrong in the world but we feel we have little power to change it. For others, the punch came when they tried to fix a problem in the world, only to discover they had to fix themselves first.

Impact investing is an attempt to respond to that punch in the gut. An Impact investor, is a person who uses the tools offered by finance and capital to respond to a problem in the world, to a situation that both our heads and our hearts tell us is wrong. That problem may be poverty, social isolation or climate change. It may be hunger, gender bias or racial discrimination.

What then is distinctive about Faith-First Impact investing? How can Faith traditions make a distinctive contribution to impact investing?

One of the huge challenges facing impact investors is that the “tools of the trade” are not morally neutral. They have a history, a checkered history. Our culture is also not neutral. Indeed, our culture and the recent history of our use of the tools of finance and capital are what have largely gotten us into the mess we are now in! The challenge we face is to find lenses through which we can critique our culture and the existing capital paradigm. Any impact investor or change maker who has sincerely tried to make the world a better place sooner or later discovers the difficult truth that without profoundly reflecting on of ourselves and our culture, our attempts fail.

This is where religious traditions can make a vital contribution. Religious traditions embody wisdom and deep understanding of human nature. Religious traditions have a prophetic element—prophets are those who feel a deep call to authenticity, and challenge those around them to live in a more authentically human way. Some modern day prophets include Mahatma Gandhi, Martin Luther King Jr., Nelson Mandela, Dorothy Day, and in Australia, Sr Brigid Arthur.

These prophetic figures help us see the world through different eyes. They challenge our assumptions, provoking us to shift the lens through which we view the world. This paradigm shift empowers us to think critically about our culture and our financial and economic assumptions.

All the major religious traditions have teachings about just finance. Whether it be Buddhist finance, the JLens, Islamic Finance or Catholic Social Tradition, each faith tradition has deep resources for this essential task of critical thinking and reflection.

So how do we define Faith-First investing?

Let’s reflect on the structural power dynamics embedded within our current investment and business system.

The Problem: Capital Supremacy (“Finance-First” Investing)

In our current economic paradigm, Capital’s interests are often structured (through ownership & governance) as above all other interests. In other words, while customers, producers, workers, communities, the environment, future generations matter to an extent in traditional firms, Capital’s interests reign supreme. All other stakeholder interests are subordinate to Capital; that is, paying out returns to shareholders.

… when you look squarely at this problem — it’s one of power. Who has the power? Who benefits? Capital does. So, how do you change that power imbalance? You have to place other stakeholders in a position of power at the table with Capital to be able to hold Capital’s interest accountable to other goods we seek; namely, the Common Good. 

Our Solution: Capital Reciprocity (“Faith-First” Investing)

Reciprocity = a dynamic of “right relationship” that enables justice and solidarity, the structured commitment to neighbor love. Reciprocity is an answer to the problem of Capital Supremacy. It exists when any business/fund/investment vehicle structures some level of mutuality between stakeholders. In other words, reciprocity balances capital’s interests in right relation with at least one other stakeholder…‍We name Capital Reciprocity as the “faith-first” approach to investing.  A “faith-first” approach is one that puts faith principles at the center of our investment decision making; it is the driver of our strategy rather than a constraint on it.

— Felipe Witchger

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I will speak from the point of view of the Catholic Christian tradition as that is the one I know best! 

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Two axes of Faith First investing

The diagram above is based on a series of core principles that Catholic thinkers have developed over time (listed below). In each case, the principle was developed as a response to the underlying question, “In the light of the Gospel, how ought we live out our faith in the context of a particular current challenge?” These real world challenges have included the industrial revolution, the nuclear arms race and climate change to name a few examples. 

Here is a brief summary of the core principles underlying the diagram above:

Sacredness and Dignity of the Human Person

Human dignity is inherent and cannot be diminished, though it can be violated. It requires courage to uphold, especially in crises. Dignity is not a scarce resource and applies equally to all, regardless of social or economic status.

Solidarity

Solidarity means caring deeply for all and committing to the common good. It involves addressing structural causes of poverty and inequality, and extends across time and species, prioritizing community life over individual gain.

Subsidiarity & Participation

Subsidiarity involves making decisions at the most local level possible, balancing individual initiative with community support. Participation emphasizes individuals actively shaping their communities.

Common Good

The common good is about community flourishing based on each member's well-being. In this view of the world individuals can only flourish when embedded in flourishing communities. It opposes utilitarianism and the "throw away" culture, ensuring no one is discarded or treated as disposable.

Universal Destination of Goods

Resources are meant for everyone, and unequal distribution is unjust. Sharing with those in need is not charity but justice, as the earth belongs to all.

Preferential Option for Those Experiencing Poverty

God treasures the poor, and actions and decision making should prioritize their well-being. All human action and economic policy should be judged by how they impact the poor and vulnerable. By fostering a culture of encounter with the vulnerable, an authentic vision of justice emerges. When we draw close to them, the poor become our teachers.

Dignity of Work and Rights of Workers

Work is for the person, it is a source of meaning, purpose, dignity and identity. A just wage and safe and dignified  conditions are essential, ensuring work fulfills real human needs.

Integral Ecology

Integral ecology connects environmental, social, and human dignity issues. Everything is interconnected, requiring a holistic (systems thinking) approach to ecological and social justice.

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These eight principles form a lens through which our culture and dominant financial paradigms can be viewed and critiqued.

“So, here and now, we invite you to decide.

Decide to see what is happening to the planet and the poor – make their suffering your own – and see the role our dominant practice of economics and finance has in all of this.”

— Francesco Collaborative

When we see this, the journey begins! We begin the hard work of reshaping our finance and capital models to serve the needs of all stakeholders, beginning with the vulnerable and the environment.

I deeply valued the time I spent participating in the Journey to Impact course with Small Giants Academy. I was surprised by the strength of the convergence between the approach the Small Giants team is building and the approach I had experienced with Francesco Collaborative. On reflection, should I have been surprised? Wrestling with these challenges goes to the heart of what it means to be human in our times. So anyone who has sincerely striven to create positive change in the world is going to be wrestling with similar questions. We may use different terminology in describing the answers but the fundamentals are similar.

I deeply respect and admire the Small Giants team’s courageous and enduring search for inspiration across a wide variety of religious and cultural resources. This openness was a characteristic not only of all the team but of each participant in the workshop. I especially value the attention given to Indigenous wisdom. That search underpins the practical and programmatic aspects of the Small Giants team’s vision to drive impact investment in a Just and Flourishing future for all on our beautiful planet.

I am currently responding to my heartbreak question by working to establish an inclusive, place based cooperative, focused on helping households transition to sustainable energy and reducing their energy costs in the process. I see this as a practical step to take action locally on climate change, and to do so in a way that brings people on the journey. In this task I am actively seeking out and engaging with young people to ensure their voices and views are heard, respected and acted upon. As a person on the journey to becoming an elder, I see my deeper mission as empowerment of others.

As I transition from my current financial arrangements, illiquid private investments, to a more flexible platform I  will engage actively in the impact investing described above.

If you are a person of faith, I invite you to reflect deeply. How do your deepest values drive your investment decisions? How ought they? Whether you are new to impact investing or an experienced practitioner, there is always more to learn and the challenges are vast. 

Take every opportunity to learn and to connect with like-minded people who are wrestling with similar questions. The need of our times is very urgent and we will succeed or fail together.

If you would like to discuss the content of this article or learn more, please feel free to contact me via: robert.stewart@seam.eco