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Vatican Pursues Impact Investing Agenda, but Some Skepticism Remains

The Vatican holds its third conference on impact investing: “Scaling Investment in Service of Integral Human Development”

SDG 1: No poverty, SDG 2: Zero hunger, SDG 3: Good health and well-being, SDG 8: Decent work and economic growth, SDG 10: Reduced inequalities, SDG 13: Climate action, SDG 17: Partnerships for the goals,
 Jul 2018

Vienna, July 10, 2018 - Impact Investing has been a hot topic with the Catholic Church ever since Pope Francis outed himself as a big fan of the idea of investing for the good with the expectation of financial return. Under his papacy, the Vatican started to hold biennial conferences around the topic of impact investing. At an audience with conference participants in the run-up to the second Vatican conference in 2016, Pope Francis noted that “the logic underlying these innovative forms of intervention is one which acknowledges the ultimate connection between profit and solidarity, the virtuous circle existing between profit and gift.” His enthusiasm for the impact investing concept reflects the Pope's conviction that global finance should be governed by ethical standards, since it was “increasingly intolerable that financial markets are shaping the destiny of peoples rather than serving their needs, or that the few derive immense wealth from financial speculation while the many are deeply burdened by the consequences.”

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Third Conference: Helping the Poor Around the World

The third of this series of impact investing conferences is currently taking place in Rome under the title: “Scaling Investment in Service of Integral Human Development” with leaders from the Catholic Church, business, banks, the investment world, academia, foundations, humanitarian organizations and interested individuals from all over the world in attendance. The conference aims at exploreing concrete ways in which money can be used to help the poor around the world. As in previous years, the conference is co-hosted by the Dicastery for Promoting Integral Human Development (IHD) and Catholic Relief Services (CRS), the official overseas humanitarian agency of the Catholic community in the United States.

Starting with a general assessment on the global and local churches' activities and progress made since the 2016 Vatican Conference, a panel will examine the question why deployment of institutional capital with impact on the very poor has so far not scaled and which models or initiatives might remedy the problem. Moderator of the panel is an experienced impact investor, Dr. Charly Kleissner of the Toniic and KL Felicitas Foundation.

Other panels will look at how impact investing can assist at-risk youth in developing countries in their search for employment, support entrepreneurial migrants and refugees, sustain healthcare access for the poor, and combat and adapt to climate change.

Helping Refugees, Migrants; Fighting Climate Change

Among the many areas discussed at the Conference, two stick out as being of particular relevance today: The need to demonstrate solidarity with the many refugees and migrants that were forced to leave their countries and now have to find ways to support themselves and their families in host countries, and the challenge of dealing with the negative effects of climate change and environmental destruction the negative consequences of which affect in particular the poorest people on this planet.

“Walking in Solidarity with Migrants and Refugees” is the title of a discussion moderated by Dr. Thane Kreiner from the Miller Center for Social Entrepreneurship at the Santa Clara University, Silicon Valley, which focuses, among other areas on women's empowerment. Participants are encouraged to discuss and develop innovative financing and business models for improving the quality of life of migrants and refugees.

Another important segment of the conference centers around the question of how enterprises and funds can help the poor deal with the realities of climate change and degradation of the environment, one of the the subjects of Pope Francis’ encyclical Laudato Si', his second encyclical where he addresses the problems and challenges arising from environmental degradation and global warming, and calls for immediate and unified global action.

There is general consensus that the efforts so far made to get a grip on the climate change problem are inadequate in view of the enormity of the challenge. The discussion about the Pope's Laudation Si' agenda and the current approaches and initiatives to address climate change is headed by Mr. Amit Bouri, Co-founder and CEO of the Global Impact Investing Network (GIIN). He praises the Vatican and Catholic Relief Services for taking a leadership role in promoting the impact investing movement.” According to Bouri, “they have recognized the powerful potential of investment capital to create impact in support of the Church’s values to mitigate climate change and enhance the lives of the world’s poorest and most marginalized communities.” The establishment of new green funds and climate-oriented adaptive business models could be promising approaches to make headway on climate action.

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Impact Investing Skeptics in the Church

An article on the impact investing drive within the Catholic Church by British political weekly The Economist suggested already last year, that, while the Pope seems to be all in favor of impact investing concept, doubt and skepticism persists in more conservative circles of the Catholic Church. So far, the Church managed its vast fortune in two, strictly separate ways: by investing it to generate more income and giving it away to charitable projects. But impact investing is exactly about merging these two activities. A shift away from the church’s current “sequential” financing model where it first acquires wealth and then gives it away, to a “parallel” one where investing and profit go hand in hand, causes some controversy and uneasiness inside Church circles.

The main concern is that making money from philanthropy is not compatible with the moral claim of helping the needy. A total reform of the church’s philanthropy strategy is therefore unlikely, argues the Economist, speculating that impact investing, while seen as a promising strategy, will not become more than a complementary one any time soon.

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Petra Allekotte