Press release, 21 March 2024: Ethics are a 'unique and essential element' of investment governance for faiths: that's the message in a new paper from FaithInvest and investment consultant NEPC which the topic of investment governance for faith organisations.
The paper – Faith-based Investment Governance – argues that faith groups, as values-based organisations serving a public purpose, operate in an environment that requires a range of faith-based considerations. That's because many faith groups believe that investment governance should reflect faith-specific values, integrated throughout the governance framework. For these reasons, ethics represent a unique and essential element of investment governance for faiths, the paper concludes.
The paper builds on an earlier FaithInvest paper, From Faith Values to Investment, which focused on the importance of investment policy statements and guidelines as the essential governing documents required for the successful integration of faith values with investments.
The new paper looks beyond investment policy statements to the broader framework of investment governance, which is described by the CFA Institute Research Foundation as “...the effective use of resources – people, policies, and systems – by an individual or governing body seeking to fulfill a fiduciary duty to a principal in addressing an underlying investment challenge.”
Governance essentials
The paper begins with a review of the typical structure, attributes, and characteristics of investment governance and is written by Rick Ciccione, Partner at NEPC. It then continues with a look at unique governance considerations for faith-based investors, written by Mathew Jensen, CFA, Director of Faith-Consistent Investing Programmes at FaithInvest.
'Effective investment governance lies at the intersection of detailed financial analysis and the organisation’s mission and culture' – Rick Ciccione, Partner, NEPC
In describing the “essentials of good governance”, Rick Ciccione writes that “effective investment governance lies at the intersection of detailed financial analysis and the organization’s mission and culture.” He continues with detailed descriptions of the “tools of good governance”, such as “a clear delineation of roles and responsibilities among the various people, teams or service providers (e.g. investment consultant or advisor) that provide input to the board, and a defined process for how they interact”.
Ciccione also stresses the importance of regular communication and collaboration between the board and other decision-making bodies to ensure that the full team's actions align with the overarching goals and values of the organization.
Implications for the faiths
Picking up on the theme of good governance in the context of the faiths, Mathew Jensen writes, “just as a faith organisation’s beliefs, teachings and values can be integrated or ‘mapped’ to important documents such as investment policy statements, faith values can also be integrated into a faith organisation’s overall governance structure, including processes and responsibilities related to the board, investment committee, ethics committee, and internal and external managers.”
'While ethics committees are not necessarily the exclusive domain of faith-based investors, their contribution to achieving faith-consistent integration is essential' – Mathew Jensen, CFA, FaithInvest
The paper goes on to describe how ethics represent a unique and essential element of investment governance for the faiths. Jensen explains that, “while ethics committees are not necessarily the exclusive domain of faith-based investors, their contribution to achieving faith-consistent integration is essential”.
Activities of the ethics committee can include making or recommending investment and engagement policy, monitoring or managing the funds under its control in support of an ethical stance in accordance with the aims of the faith organization and evaluating the faith organization’s broader ethical questions and concerns, among other activities.
As emphasised in the paper, there are resources and solutions available for faith organizations seeking to construct robust investment governance structures, including networks such as FaithInvest and consultants such as NEPC.
Notes for editor:
FaithInvest is a non-profit organisation founded to support all faiths to invest in line with their values, for the benefit of people and planet. We do not provide investment advice or make investment decisions for faith groups. Registered UK charity: 1187015/Registered company limited by guarantee: 11862410. For more information please visit faithinvest.org
NEPC is an independent investment consultant, private wealth advisor, and OCIO provider serving over 400 retainer clients and $1.6 trillion in total assets. Combining a proprietary research team dedicated to the long-term challenges facing investors with our unique client centric model, NEPC builds forward-looking investment portfolios for institutional investors and ultra-high-net-worth families. For more information about NEPC, please visit NEPC.com.
Media contacts:
Susie Weldon, Director of Communications, FaithInvest (UK)
Steven Owen, Investment Marketing Communications, FaithInvest (USA, San Francisco)