Credit the nuns, again.
More than a decade ago, a women’s religious order, among the largest clients of Ascension Investment Management, asked the St. Louis-based asset manager to do more than simply screen “sin stocks” out of their portfolio.
In addition to avoiding investments that conflicted with their faith, the sisters wanted to know, could their capital be invested to actively support the vulnerable and the environment?
The conversation sent AIM digging through its portfolios of private equity and real assets for investments that were delivering such impact. In 2014, a half-dozen Catholic institutions together allocated $50 million for AIM’s first impact investments (see “More Catholic capital flows toward impact investing”).
“We started pinpointing some of those funds that were in our traditional portfolios,” says Jessica Cook, a managing director at AIM, a unit of Ascension Health, one of the largest nonprofit and Catholic hospital networks in the US. Such funds could deliver competitive returns and also “point to stories and companies within those funds that were delivering on the idea and mission behind what the sisters were talking about,” Cook says.
Since then, 21 Catholic faith-based investors have committed a combined $287 million across four of AIM’s impact strategies. AIM began managing capital for outside investors in 2012 and now manages more than $42 billion in total.
Ascension Investment Management has now joined with Anthos Fund & Asset Management in the Common Good Fund, a private market fund-of-funds. In a statement, Anthos said the Common Good Fund is grounded in Catholic social teaching and Mensuram Bonam, a 2022 Vatican document that gives Catholic institutions ethical guidelines and a framework for aligning portfolios with Catholic values.
Anthos, part of the century-old family office of the Brenninkmeijers, the Catholic family behind C&A, a European clothing retailer, manages the Luxembourg-based Common Good Fund. AIM is the US partner, through its subsidiary, Common Good Fund US, according to an SEC filing.
The Common Good Fund has raised $90 million toward its $250 million target. A second close is expected at the end of this month. “We see increasing interest in practical ways to align their portfolios with their values while maintaining institutional investment standards,” said Anthos’ Marjolein van Dongen.
Institutional portfolios
Calvert Impact last month released an updated guide for faith-based investors and their advisors at the 70th anniversary gathering of the Leadership Conference of Women Religious. The guide also cites the Jewish Federation Bay Area and the Mennonite-based Praxis Investment Management and Everence Financial in Goshen, Indiana as examples of faith-based investors. Muslim investors can choose from a variety of Sharia-compliant funds (see, “The impact portfolio hiding inside US Islamic finance”).
“Many investors step back from more nontraditional investments when the world gets especially uncertain, but faith investors tend to step up, and they’ve been doing so for centuries,” write Calvert Impact’s Patricia Redsicker and Annette Vogel. “Religious institutions were some of the earliest impact investors using their portfolios to promote environmental stewardship, human dignity and flourishing and have shaped the impact market we know today.”
Four Catholic women’s religious groups, including the Franciscan Sisters of Mary, Catherine Donnelly Foundation, Daughters of Charity and Missionary Sisters of the Sacred Heart of Jesus, were among the first to sign the Catholic Impact Investing Collaborative’s impact investing pledge, along with Ascension Health, and Mercy Investment Services, the investment arm of the Sisters of Mercy and Mercy ministries.
Religious congregations and their governing bodies collectively oversee $12 trillion assets globally, and even more if Shariah-compliant investments are included. FaithInvest in April convened “Faith in the Common Good,” with representatives from a dozen religious traditions, including Christian, Muslim and Hindu leaders, at the Collège des Bernardins in Paris.
Catholic institutions have long screened “sin stocks” out of their portfolios. Increasingly, though, dioceses, religious orders and Catholic health systems want their money to do more than avoid harm (see, “How faith-based investing could and should become more impactful”).
“While we have been doing the excluding and the shareholder advocacy in the public arena in line with Mensuram Bonam, we also had the opportunity to enter into private markets which allows us to enhance our portfolio,” Sister Sue Ernster of the Franciscan Sisters of Perpetual Adoration said on ImpactAlpha’s Agents of Impact Call in July.
“When we invest in the private sector, we really look at the companies where they are treating their staff well and look at the human dignity and h we also are concerned with how this product, or whatever the company is doing, is benefiting the end user.”
The sisters, based in La Crosse, Wisconsin, screen investments against Catholic social teaching and sources investments and diligence partners through the Catholic Impact Investing Collaborative and Charism Capital.
With women religious congregations and family offices, Charism Capital launched last year as a global fund with a restorative investing lens. The impact-first manager secured a $24.3 million first close for the fund in July, according to an SEC filing.
Charism has invested in first-time funds including Apis & Heritage Capital Partners, a private credit firm that offers mezzanine financing for employee-led buyouts, and Blackstar Stability, which converts contract-for-deed loans into conventional mortgages, reducing borrowers’ monthly payments by roughly 40%, or about $200 to $400 a month (for background see, “Replacing predatory loans to build equity and wealth for homeowners of color”).
Mercy Partnership Fund, based in St. Louis, is the global investment strategy of Mercy Investment Services. MPF’s investment supports Vita Green Impact Fund’s strategies to advance sustainable energy, water, and forestry solutions. Providing clean cookstoves to households in Ethiopia and Eritrea, for example, reduces the burden and deforestation from firewood collection, increases accessibility to clean water, and improves livelihoods and health outcomes, for women and girls in particular.
Aligning assets
AIM’s impact strategy invests directly in funds and sometimes co-invests with them. Its portfolio splits roughly in half between social investments, such as financial inclusion, housing, food, healthcare and education access, and environmental ones, including renewable energy and conservation.
Anthos said the Common Good Fund’s stewardship-based approach includes three core principles, a Call to Exclude, avoiding investments not aligned with the fund’s values; a Call to Engage, meaning active collaboration with managers to improve results; and a Call to Enhance, by allocating capital to solutions that create positive impact.
Both Anthos and Ascension have experience in faith- and value-based investing as well as access to high-quality private market opportunities and strong impact measurement capabilities. “We combine expertise in faith-based investing and private markets to provide professional investors with access to opportunities that seek to align financial objectives with mission-driven values,” Cook told ImpactAlpha.
An in-house ethics team helps screen the investments for faith-based considerations alongside the investment team’s financial screening and due diligence.
“When you’re investing in areas like venture capital, aerospace can quickly become defense, energy can quickly become weapons of mass destruction,” AIM’s Tyler Blickhan told ImpactAlpha. “We rely really heavily on internal guidance.”
AIM is an investor in Apis & Heritage and Blackstar Stability. The asset manager’s funds portfolio also includes Creation Investments Management, a Chicago-based impact investment manager that provides private equity and credit to microfinance, fintech and affordable-housing-finance companies advancing financial inclusion in emerging markets. AIM has backed Jonathan Rose Companies to acquire and preserve affordable and mixed-income multifamily housing in New York, Boston and other cities where renters are struggling with the rising costs of housing.
Earlier, AIM co-invested with Blue Earth Capital and Leapfrog Investments in GoodLife Pharmacy, East Africa’s largest private retail pharmacy chain tackling the region’s problem with counterfeit medicine with real, affordable drugs (see, “More Catholic capital flows toward impact investing”).
The Franciscan Sisters of Perpetual Adoration are responding to Pope Francis’s book, “Let Us Dream,” Sister Sue said on the Call. She invited faith-based investors, not only Catholic investors, to pool their capital and their resources into investments that are better for the planet and human flourishing.
“We have learned that this is part of our mission and the world is really looking to us to see where we are witnesses, where our values are,” she said. “The financial markets really show what’s important.”
