Stewardship Kaleidoscope workshop explores the growing power of putting our money where our hearts are

Values-based investing supports social and ethical stands

by John C. Williams for the Presbyterian Foundation | Special to Presbyterian News Service

James Carey (Photo by Gregg Brekke)

Concerns about climate change, diversity in the workplace and corporate boards, tobacco marketing, fossil fuels and weapons of war have shaped the way churches invest. This applies to endowments, strategic investments and other long-term investment tools.

Those concerns have also helped shift corporate responses, say leaders at New Covenant Trust Company, part of the Presbyterian Foundation.

Ten years ago, people thought they would have to sacrifice return on investment if they chose to exercise “values-based investing,” says Greg Rousos, president and CEO at New Covenant Trust.

Some studies suggest, though, that companies that focus on good social policies, on good governance, on improving diversity and inclusion both in the workplace and on their corporate boards, may have a better opportunity to outperform similar companies without such focus.

Rousos along with other New Covenant staff members spoke at the Stewardship Kaleidoscope conference, an annual event held collaboratively by the Presbyterian Church (U.S.A.) and the Evangelical Lutheran Church in America. This year’s conference was held September 26-28 in Savannah, Geogria.

Church members want to know, “what does your voice say, what do your actions say, and what do your financial investments say,” Rousos said. “They want to know your answers.”

Primary approaches are screening to divest — reducing or eliminating investments in companies that don’t meet your church standards for social, ethical or environmental issues — and to invest in companies that adhere to your church values.

“We are seeing shareholders, the owners of these public companies, forcing companies to change their approach on issues such as climate, diversity” and other values-based decisions such as fossil fuels, tobacco and the production of guns or weapons of war, says James Carey, director of investments at New Covenant.

Values-based investing has grown dramatically in recent years as younger people select how their money gets used, Carey said. In 2020, about $50 billion was invested based on values, which grew to $70 billion one year later.

The Interfaith Center on Corporate Responsibility shows about $4 trillion invested in firms that adhere to some level of values-based investments.

While values are subjective, Carey pointed out that when it comes to climate change, in 2021 there were 22 climate-related disasters around the world that each cost more than $1 billion.

Another concern investors often voice is diversity, equity and inclusion. New Covenant Trust Company has developed an investment strategy that takes those factors into account.

Under New Covenant’s diversity, equity and inclusion investment strategy, the companies it has invested in have higher than the index average in the following areas:

• employment diversity
• numbers of diverse board members
• female executives
• more women on corporate boards.

Churches also can select themes to guide their values-based investments, such as focusing on affordable housing or community impact. For instance, funds can be invested in firms that provide mortgages to lower-income families for affordable housing. These impact bonds are designed to provide a market rate of return while contributing to a positive environmental or social impact.

For more information about values-based investing through the Presbyterian Foundation and New Covenant Trust Company, go here.

John C. Williams is a veteran writer with his own PR firm specializing in helping K-12 education, government and non-profits tell their story. He is a 30-year member at Sea Island Presbyterian Church in Beaufort, South Carolina. Send comments on this story to robyn.sekula@presbyterianfoundation.org.