Faith-Based Investing Should be Treated with Scepticism

Faith-based investing is a form of ethical investing.  Ethical investing is the practice of using ethical principles as the primary filter making investment decision.  These parameters are wholly dependent on the views of the investor, and can be quite arbitrary.  Faith-based investing is a gimmick, meant to cater to specific groups who use religion as a crutch, and eschew some of the fundamental principles of investing in favour of specific notions of jurisprudence.  Even from a religious perspective, these may be fringe ideas. 

Christian faith-based investing comes in a broad spectrum.  For example, many American “Christian” faith-based investing firms are Evangelical in nature.  The American Evangelical movement is a largely fringe Christian movement with unique theological and jurisprudential ideas that distinguish them from mainstream Protestantism, let alone mainstream Christianity.  That means, aside from the usual prohibitions of investing in gambling or companies known for unfair practices, there is a broad category of “anti-family” prohibitions.  This include not investing in pharmaceutical companies or healthcare companies because of they facilitate abortion, or certain companies because of their equality policy on appointing women, because this would be “contrary to the Bible”.  Whilst prohibitions against pornography is reasonable, many such companies have a broader definition of pornography which extends to certain expressions of dress in media, for example. 

Funds are also used as a weapon to advance a specific Evangelical agenda, including support for the Christian Zionist movement.  This includes support of policies to the Right of the political spectrum, and the State of Israel, regardless of its policies.  There is a certain irony in supporting an apartheid nationalist entity that is persecuting Palestinian Christians in the land where Christianity was born, and then claim that their ethics are Christian. 

Jewish faith-based investing firms are centred around the concept of “tikkun olam”, “restore the world”.  Because of the wide spectrum of beliefs, these firms are either niche, or funds under larger entities such as Morgan Stanley.  Since many of them are based in the United States or Israel, the majority of them channel their investments through a political prism that includes an invariable support of the State of Israel.  This calls into question whether their tikkun olam is a universal concept, or part of a zero sum equation. 

The largest number of faith-based investing is found in the Muslim world, where it is better known as part of “Islamic” finance.  These companies adhere to a concept of shari’ah compliance that is ostensibly in adherence to the Qur’an and the sunnah, the ways of the Prophet (s.a.w.).  As a Muslim myself, I think “Islamic” finance is largely a scam.  Most of the scholars who sit on these shari’ah compliance boards are themselves paid for by the very institutions whose products they are supposed to regulate.  This is an unacceptable conflict of influence. 

The primary bogeyman of shari’ah compliance products is riba’, usury.  This definition of riba’ varies widely, but us largely taken to be any form of interest, or capital gain “without basis”.  There is a prohibition against any form of debt-based financing or debt instruments.  All this, however, is largely cosmetic.  “Islamic” finance uses semantics and convoluted thinking to come up with the “shari’ah compliant” versions of normal financial instruments or transactions which underperform in comparison. 

In summary, I remain greatly sceptical about any form of faith-based investing.  I do not discount that we should have ethical values as a consideration in where we put our money, but there has to be a stronger basis for common sense and a deeper understanding of finance.  Ethics must grounded in a wider framework of humanitarian values, such as concern about justice, equality, human rights, and environmental protection.  Faith-based investing tends to give little regard to this.  Religion is used as an excuse to actively discriminate and oppress.  Faith-based investing is predatory.