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Faith and Finance

Perspective

Fall 2018

CPG’s international impact investing roundtable in London

Faith and Finance: Investing in Values

CPG’s benefit payments to clergy and lay employees far exceed the assessments we receive. This means that smart investments must fill that gap. An important piece of this work is in the area of impact investing. The Church Pension Fund, a leader in the field, has put approximately $1 billion into impact investments, which help address challenging societal and environmental issues while also earning returns commensurate with our other investments. “This says to me that we are taking our call to bless the world really seriously,” Church Pension Fund Board Chair the Rev. Thomas Brown noted. Ensuring that values and finance are in harmony, however, is no simple feat. In October, CPG hosted an international roundtable in London to address a fundamental question: How do you measure the societal and environmental impacts of investments?

Positive impact investing, thought leadership, and shareholder engagement are the three prongs of The Church Pension Fund’s approach to strengthening socially responsible investing. To share our expertise and to learn from that of others, we gathered some 20 representatives from asset owners (like The Church Pension Fund), investment firms, and policy advocacy organizations in London at Church House, headquarters of one of the investment funds for the Church of England.

“Our connectivity to the broader Anglican Communion and the global reach of CPG’s thought leadership both came into play here,” CEO and President Mary Kate Wold, who led the roundtable, explained. “We convened these investors and other experts to examine what industry leaders are thinking about how we define the effects of our investments, what our goals are, and how we measure success. We also explored best practices for advancing impact investments by encouraging other investors to bring their money to the table.”

In fact, CPG’s ability to convene and connect had resulted not only in more money on the table, but also an award at the Global Climate Action Summit in San Francisco a month earlier: The Coalition for Environmentally Responsible Economies (CERES) recognized The Church Pension Fund for socially responsible investing innovation in collaboration with Wespath Benefits and Investments (an agency of The United Methodist Church). Each organization had invested $30 million in off-grid solar companies and had brought increased capital into this critical emerging area of climate change mitigation.

In London, the discussion turned to the complexities of measuring the degree to which impact investments help lift people out of poverty, improve their quality of life, and make a difference in the environment. What, exactly, is the resulting collective good? And in doing good, how do investors ensure that there are no unintended negative consequences? “With renewable energy, for instance, if we use a vendor with poor labor practices to install solar panels, then that will have a negative social impact,” CPG’s Vice President of Investments Christopher Rowe explained.

The big takeaway of the roundtable was a desire to narrow the frameworks for defining the social and environmental problems to be addressed, thereby allowing for better and clearer data reporting of the outcomes. “If we want to define and measure impact and improve consistency to enable the industry to tell better stories,” Christopher said, “then a lot of the energy behind this work needs to come from the pension plans, the foundations, the endowments—the large asset owners like The Church Pension Fund—because the investment firms that we hire will do what we ask them to do. So, we are helping to drive this conversation, both at home and around the world.”