Religious institutions have traditionally had a unique approach to asset management and investment. In recent years, attention to climate change and socially responsible investing has become increasingly important, though widespread professionalisation remains elusive.
Financial matters are intrinsically linked with religious organisations, from the upkeep of monumental buildings to managing significant assets. In the Netherlands, religious assets are substantial yet opaque, making it difficult to quantify them precisely. Estimates suggest the Catholic Church controls several billion euros, while the Protestant Church reported assets of €1.6 billion in 2020. The financial details of Islamic mosques and Jewish communities remain undisclosed, though their total assets also run into millions of euros.
Asset managers have long targeted churches, occasionally tailoring their products to suit religious principles. For example, in 2019, Van Lanschot Kempen launched the Labor et Caritas fund in Belgium, which excludes companies involved in gambling, weapons, and controversial biotechnologies. As of 2024, the fund manages over €28 million.
Fossil fuels eschewed
Religious institutions often find it easier than other investors to eschew fossil fuels. By the end of 2016, nearly 700 institutions—including the World Council of Churches and the Lutheran World Federation—had pledged to divest from fossil fuels, with investments totalling approximately $5,200 billion.
However, religious denominations require more knowledge and guidelines on investing. The Credible Investing manual, developed by Dutch religious council KNR and the protestant church, advocates for a blend of financial and social returns, stressing that credibility is compromised when financial gains come at the expense of social causes.
Investment strategies within church organisations typically reflect a long-term, conservative approach focused primarily on asset preservation. Han Dieperink, Chief Investment Officer of Auréus, notes that religious groups are conservative, often necessitating more aggressive investments to keep pace with inflation.
Henk van Stokkom, a philanthropy expert and former investor, attributes this conservative tendency to banks’ interests in maintaining assets under management to collect fees.
Shift observed
Jeroen Crajé, a financial economics staffer at KNR observes a shift towards investments that maximise social impact, aligning with recent climate and environmental initiatives endorsed by religious leaders. The Pope’s 2015 encyclical Laudato Si’ and the World Council of Churches’ 2014 directive to cease fossil fuel investments exemplify this alignment.
Despite these trends, Dieperink identifies challenges in aligning religious and ESG (Environmental, Social, and Governance) investing principles, particularly when religious doctrines conflict with broader sustainability standards.
Investment decisions in religious organisations vary. Crajé notes that governance is typically handled internally, with little public disclosure. Larger entities, like dioceses, may form advisory boards and create investment pools, drawing on external expertise.
Van Stokkom, however, questions the need for further professionalisation, arguing that it undervalues the contribution of volunteers. He highlights governance as a critical area of concern, referencing a recent legal dispute involving the R.C. Maagdenhuis Foundation, which saw its assets revert to the diocese following governance failures.
Ultimately, members of religious communities must remain vigilant about investment strategies and performance, utilising annual reports and other disclosures to ensure their values and financial objectives align.
This article was originally published in Dutch on InvestmentOfficer.nl.
Further reading on Investment Officer Luxembourg:
- Faith-based investors dislike Apple, DSM, but love Inditex
- TerrAssisi fund: ESG investing inspired by Saint Francis
- ‘Positive ESG impact doesn’t come at a financial cost’