FaithInvest considers itself very fortunate that its Chair of Trustees, Dave Zellner, is taking on a more active role in the organisation as its Executive Chair, having just retired after 27 years as Chief Investment Officer at Wespath Benefits and Investments.
That is particularly important because we are embarking on an exciting new phase with the launch of an ambitious capital campaign to enable us to develop new services that will support more faiths to invest in line with their values.
But it is also because, with his unparalleled experience and credibility in faith-aligned investing, Dave has a deep understanding of the difficulties that faith-based asset owners (FBAOs) encounter as they seek to implement faith-consistent investing (FCI). This will be crucial as we develop our plans to address these challenges further.
It's something he feels passionate about, as he explains: 'FaithInvest’s mission to support faiths to invest in line with their values for the benefit of people and planet resonates deeply with my own professional journey and personal convictions.'
'That’s why I’m so pleased to be in a position to devote a significant amount of my time on a voluntary basis as Executive Chair to help us support even more faith groups and to grow the FCI movement.’
For nearly three decades Dave has been at the forefront of managing the prudent stewardship of assets, while aligning investments with faith values. Wespath manages more than US$25 billion in assets (as of 31 December 2023) on behalf of over 100,000 participants and 150 United Methodist institutions.
Under Dave’s leadership, Wespath crafted its Sustainable Economy Framework (SEF), which aligns with the vision of the United Nations Sustainable Development Goals (SDGs). Dave says: ‘Once investors understand the aspirations of the SDGs, they recognise the importance of pursuing investment strategies designed to mitigate systemic risks affecting people and planet, resulting in a more sustainable and equitable future.’
How faith-aligned investing has developed
Dave has witnessed a huge change in faith-aligned or faith-consistent investing since he joined Wespath as CIO in 1997. 'When I started 27 years ago, I would talk about faith-aligned investing in the work that we did, and people were very polite and would listen to me, but they were very focused on their approach – which was no different than what you would see from a secular investor,' he said.
'It was only when they started getting pressure from their stakeholders that I started getting phone calls from people saying, okay, I heard you talk about such and such a few years ago. Tell me how you went about doing that.'
Nowadays, there's much greater awareness of faith-consistent investing, and the market for faith-aligned investments has grown enormously. However, religious groups seeking to invest in line with their values still face many obstacles and challenges.
While Dave believes that most members of faith groups are fully committed to the principle that their assets should be invested in line with their beliefs, he points out that the people deploying those investments are still usually doing so through a secular lens, wanting to get the best returns and believing that aspiring for positive impact will adversely affect returns.
Another complicating factor is the pressure, common in the investment industry, to focus on short-term performance rather than long-term gains.
'My experience is that most investors aspire to be faithful stewards of the investments they control,' he explains. 'But this desire often conflicts with the pressure felt from trustees and other stakeholders, who tend to judge performance on a quarterly and yearly basis.
'Hence, priorities and interests often evolve to deliver results aligned with the near-term expectations of these investor governance bodies rather than alignment with what is truly in the best long-term interests of all stakeholders.
'It is essential to think long-term, to focus on the broad economy and systemic risk, and to advocate for business policies and practices that attain the long-term sustainability of companies. It is possible to do this and to make good returns – and Wespath's record proves that is the case.'
Learnings from FCI's evolution
Dave witnessed a significant evolution in how faith organisations approach faith-consistent investing (FCI). Many faith-based asset owners have traditionally focused on excluding investments in companies associated with alcohol, tobacco, weapons, gaming, and adult entertainment industries.
However, Dave recognised that achieving broader change for the good of people and planet requires a more comprehensive strategy. ‘While exclusions are an important element of faith-aligned investing, transforming the world in alignment with the SDGs requires bolder action,' he explains.
Increasing numbers of faith-aligned investors are adopting a more nuanced and impactful approach that incorporates three elements: invest, engage, and avoid. Such a strategy allows an organisation to maintain strong financial performance, while more actively pursuing its mission of driving positive change.
The 'invest, engage, avoid' approach goes beyond simple exclusions, actively engaging with companies to promote sustainable practices and investing in opportunities that align with an organisation’s values and long-term vision for a sustainable economy.
'This comprehensive approach strengthens an organisation’s commitment to achieving systemic changes for a more sustainable and equitable future in the economic system while also fulfilling its long-term performance objectives,' he says.
Principles for Responsible Investment
A key moment in Dave's personal journey in understanding how applying faith values could result in better long-term profitability came when he got involved in the United Nations' Principles for Responsible Investment.
In 2005, he received a personal invitation from then United Nations Secretary-General Kofi Annan to represent Wespath (at the time known as the General Board of Pension and Health Benefits of the United Methodist Church) in a groundbreaking initiative.
He was selected as one of only two dozen leaders worldwide – and the only representative from a faith-based organisation – to help craft the UN's Principles for Responsible Investment (PRI).
The PRI, signed in April 2006, marked a pivotal moment in the global investment landscape. It called for the consideration of environmental, social, and governance (ESG) factors in investment decision-making, a concept that has since become increasingly mainstream.
Under Dave's participation, Wespath played a crucial role in shaping these principles, bringing a unique faith-based perspective to the table.
'When we made the link to having sustainable business practices that would help strengthen longer term profitability, that, for me, was the lightbulb moment where aspiring to achieve faith values in terms of operating a business would strengthen the potential for better long-term profitability,' he says.
Today, the PRI stands as the world's largest membership organisation advocating for the adoption of sustainable business practices. 'Being part of the founding group that developed the PRI was a true honour,' he says. 'It allowed us to contribute our values-based investment philosophy to a global framework that has since transformed the investment industry.'
Real-world impact
Under Dave’s leadership, Wespath's commitment to faith-aligned investing translated into substantial real-world impact. It deployed more than $2 billion to support housing for low and moderate-income families, demonstrating a significant commitment to addressing social inequality.
Dave's vision extended beyond national borders. Wespath invested in development projects in low-income communities and funded microfinance institutions, supporting entrepreneurs in developing countries worldwide.
Environmental stewardship was also a key focus during Dave's tenure. Wespath committed investments to promote sustainable forestry practices and projects accelerating the transition to a low-carbon economy.
One of the most innovative initiatives under Zellner's leadership was the co-development of the Transition Ready Portfolio strategy with BlackRock, the world's largest asset manager. This groundbreaking strategy identifies and invests in global public companies best positioned for the transition to a low-carbon economy.
'The Transition Ready Portfolio strategy is a prime example of how we've worked to create investment products that not only deliver returns but also support a more sustainable future,' Dave explains.
Driving systemic change
The 'engage' element of a comprehensive sustainable investment programme can be a powerful tool for driving positive change. Dave strongly supports active participation in global influential investor coalitions.
Influential coalitions include the US-based Interfaith Center for Corporate Responsibility, which played a crucial role in investor engagement that contributed to the end of apartheid in South Africa; the Net Zero Asset Owner Alliance, committed to combating climate change along with Climate Action 100+; and the Council of Institutional Investors which pursues policies promoting best practices for corporate governance.
'Participation in these coalitions is crucial in amplifying an investor’s voice and driving systemic change addressing global challenges, he says.'
Dave is a founding member of the Investor Advisory Group for the Sustainable Accounting Standards Board, which later evolved into the International Sustainability Standards Board and has been instrumental in advocating for public company disclosure of material and financially related sustainability metrics.
This work in standardising sustainability reporting represents a significant step towards integrating environmental, social, and governance factors into mainstream financial decision-making, further cementing Dave's legacy as a pioneer in responsible investing.
The power of faith-consistent investing
Dave is excited to embark on this new chapter with FaithInvest whose mission to support faiths to invest in line with their values for the benefit of people and planet 'resonates deeply with my own professional journey and personal convictions,' he says.
'Throughout my career, I've seen the power of faith-aligned investing to drive positive change. At FaithInvest, I aim to build on this experience, working alongside like-minded individuals and organisations to amplify the impact of faith-based investing on a global scale to achieve a just and sustainable world.'
Read our press release announcing Dave's new role as FaithInvest Executive Chair