A new approach to responsible investing

| February 12, 2015 | 0 Comments

Catholic investors and Catholic institutions have typically used “negative screening” to avoid supporting companies with products or services that are anathema to Catholic values.

Martijn Cremers

Martijn Cremers

But a movement toward “impact investing” is trending, one that takes a positive, activist approach to socially responsible investing, according to University of Notre Dame finance professor Martijn Cremers.

“If you are strongly convinced something harms another person, you don’t want to invest in it,” Cremers explained. “You don’t want to make money through vehicles that harm people, but you want to do more than that.”

Cremers spoke Feb. 11 at the 20th annual Investment Conference of the Catholic Community Foundation of Minnesota.

The conference each year offers an opportunity for CCF clients — individual donors and schools, parishes and other Catholic institutions that have endowments managed by the foundation — to learn how investment portfolios were and will be managed.

Inviting Cremers as one of the speakers, CCF president Anne Cullen Miller said, was an effort by the foundation to continue to grow understanding that socially responsible investing is a way to live one’s faith.

“We want to stress how important it is as Catholics,” Miller said, “to be Catholic in all we do.”

The conference, held at St. Peter Church in Mendota, drew a record attendance of more than 140 people.

Value plus virtue
Cremers said the goal of impact investing is to integrate investing with Catholic social justice principles.

Keys to socially responsible impact investing, he said, include:

• PURPOSE — One that contributes to human flourishing, advances human dignity and enhances the common good by fulfilling genuine human needs. That means the firm’s social impact is “an inherent part of the corporate strategy,” Cremers said. An example would be a business that creates value through fulfilling neglected social or environmental needs, he said.

• PRIORITY — A priority to create value for everyone related to the business while keeping in right relationships. It recognizes people’s mutual dependence, shares both risks and benefits, and holds to a preferential option for the poor.

• PRACTICE — Practices that efficiently and justly compete in the marketplace. Firms to invest in would not abuse power or control.

“The Catholic Church teaches we are our brother’s keeper,” Cremer said. “As Catholics, we don’t want to be involved in business strategies based on ‘heads I win, tails you lose.’ ”

Impact investing requires all three, purpose, priority and practice, Cremers said. The corporate strategy must be to advance humanity, while acting justly and returning market-rate gains.

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