Faith-based organizations are increasingly investing in socially and environmentally responsible causes. A 2010 global study of faith institutions showed that 77% of 103 respondents practice impact investing. At the Franciscan Sisters of Mary, or FSM, a Roman Catholic group based in St. Louis, Mo., its CEO and CFO John O’Shaughnessy is finding that such impact investing also generates attractive returns. The organization is “geared toward reversing the devastating effects of climate change, advancing sustainable land management, and providing clean energy access in places where power generation typically does not exist,” it says on its website.
FSM traces its origins to six women who fled religious persecution in Europe 146 years ago and landed on the St. Louis riverfront and formed a faith-based community. “Back then, FSM served the sick, the poor and other vulnerable sections in their community,” said O’Shaughnessy. “We had been doing socially responsible investing by screening out companies that were not aligned with our mission, voting proxies, some shareholder engagement, some investment in community development and housing loan funds, but we really weren’t measuring up to what our guidelines said we should be doing.”
FSM had an epiphany of sorts in 2009 when it went looking to see how it could “be doing more positive things.” O’Shaughnessy said FSM “discovered that there was this burgeoning space out there with people who were doing impact and mission-related investing well beyond what we were doing.” He shared insights about impact investing with Knowledge@Wharton for its podcast series “From Back Street to Wall Street.” The series is being produced in partnership with Impact Investment Exchange (IIX), a Singapore-based organization that serves as a bridge between investors and development goals in Asia.
Impact Investing Strokes
FSM went about its new investment philosophy with deliberate moves. In 2012, it began investing in helping build capacity for clean energy such as renewables and energy efficiency. Two years later, inspired by the University of Dayton, it joined the “DivestInvest” pledge, a global investor movement towards sustainable energy. Investors who take that pledge divest from companies with fossil fuel reserves such as ExxonMobil or Chevron; at last count, it had investments of some $7.2 trillion committed to its cause. “For us it made perfect sense,” said O’Shaughnessy. “We no longer wanted to invest in things that were adding to the problem, in terms of climate change, greenhouse gas emissions, and so forth.” By the end of 2014, FSM had divested fully from companies that had fossil fuel reserves.
“This can be systemic change. This is capitalism at its best.”
Next, FSM joined the Midwest Coalition for Responsible Investing, a group of religious communities based in St. Louis that aims to invest in companies that take their environmental, social and governance (ESG) responsibilities seriously. Through the coalition, FSM finds opportunities to move joint shareholder resolutions at the companies they invest in.