Saturday, 27 July 2013

Ethical Investment is not really investment

Well, not in the financial sense anyway!

I find it interesting that when engaging in conversations with people the issue of 'the Church' and money often crops up and those who bring it up often work on the same script as me dear old Dad (what's no longer with us). It goes a little like this (they're in italics):

So why does the Church need money then, I thought it was rich?
Well it does have money, that's true, but it needs what it has to provide for the future by investing some so that they can spend the rest wisely.

Yeah, but if it spent the money it has it wouldn't need to be out with the begging bowl all the time - after all it's not like you've got much to pay for!
But there's loads we need to pay for - we have to pay for the maintenance and upkeep of the buildings, gas, electric and water, staffing, housing, administration ... everything down to, and including, bread, wine and toilet roll.

But the government pays for that though, doesn't it?
Nope - everything we have to pay generally comes through the giving of the church members and fees* for some of the services that we do.

This is usually the point where the other party expresses surprise as they thought 'the Church' was in some way funded or subsidised by the state - after all (as one person put it) - the Queen owns all this so surely she should be paying for it!!!

It is about now that the conversation either tails off, or moves into the more interesting topic of investment.

The problem as we hit this area is that I am usually told that we should be getting the best returns we can on our investments but when I ask whether investing in arms companies, or in organisations that scar the earth or damage the environment in pursuit of profit the answer is, more often than not, a resounding 'No'. I then have to explain that the more risk and the dirtier the deed, the better the potential for high returns on invested capital and, of course, vice versa.

In monetary terms 'truly ethical' is really lending money at no interest to altruistic and beneficial companies. Those who will make a difference (in a good sense) but not a profit.

This is why there are quotas and limits placed on the 'ethical' definition and I have to admit that I'm not comfortable with them, for they go something like this (ballpark figures - I'm a dogcollar not an investment banker or manager):

An investment is considered ethical if the total involvement of the company being invested, in those acts which might be considered to have limited or dubious moral or ethical standards, comprises no more than twenty-five percent (25%) of its business.

This means that, with regard to the CofE and it's investments, they can invest in a finance group which has, as this is an issue at the moment a payday loans division, and as long as it's less that twenty-five percent of its overall business then they can still say they have ethically invested.

When it comes to armaments, munitions and other 'weapons of war', they can still invest in a company which produces them (or components for them - often harder to pinpoint) and here the threshold is lowered to say, ten percent.

The problem we are seeing with Justin's stand against high-interest, short-term, payday loans is that the investment division of the CofE are applying the limits and are, technically, maintaining the ethical investment stance. The easy answer would be to only invest in truly ethical institutions and accept that there's not going to be any real interest (could put it in the bank and see the same interest - except of course they are more than likely not investing their money ethically either and so the money still has that taint attached, albeit second or third hand).

I'd rather that we didn't put even a penny where it will be used for a business that denies the Biblical teaching - but that would surely means that interest and that nasty word, 'usuary', would have to crop up.

As one who supported a now defunct Credit Union I long for the day when we could see them working out of every church building, acting to combat the rising tide of debt and working to maximise what people have and helping them into healthy and sustainable lifestyles.

So before we laugh at Justin's misfortune we ought to realise the complexities of trying to balance the books and the problems of realising the best interest on what capital we have financially and ethically.

So let's applaud Justin and hope that which he has started will continue and that we will see an increase in church-based credit unions for our members and, most importantly, for the people we serve and live out the Gospel with.


*Usually another interesting conversation to be had regarding setting of fees by Parliament; Ranges from disgust to amusement to indignation that the State should 'dictate' to the Church :-)

1 comment:

Louise said...

Good well balanced post :)