Editor’s note: The following is an excerpt of an essay, “Francis Challenges Us All,” by Finance Professor Martijn Cremers that appeared originally on U.S. News & World Report’s website on Sept. 23. Cremers wrote the piece in response to Pope Francis’ U.S. visit, and as a reflection about the pope’s encyclical Laudato Si’. The entire essay is available on USN&WR website.
[The message of Laudato Si’] that “everything is connected” challenges us in different ways depending on our outlook. If we try to live as faithful Christians, do we recognize that being “protectors of God’s handiwork is essential to a life of virtue,” or are we in need of an “ecological conversion”? If we are (presumptive) experts in one particular area of knowledge, such as technology or finance, is this “integrated into a broader vision of reality,” or have these tools become ends in themselves without keeping a clear recognition of their “potentially negative impact on human beings”?
If we have great concern for the environment, is this “joined to a sincere love for our fellow human beings and an unwavering commitment to resolving the [broader] problems of society,” or is our environmentalism “inconsistent [by] remaining completely indifferent to human trafficking, unconcerned about the poor, or undertaking to destroy another human being deemed unwanted” in abortion?
Francis discusses the implications of this core message in a large variety of contexts. As there is not enough space here to tackle the encyclical’s treatment of business in general, let me end with a brief summary of what seemed most pertinent to me — unsurprisingly perhaps for a professor of finance at the University of Notre Dame, where our business school’s motto is “Ask More of Business” — namely his suggestions for the role of markets and finance.
While the encyclical does not use these terms, I would summarize the pope’s views as advocating impact investing, which I would define as investing in businesses that create value through fulfilling relatively neglected social or environmental needs, where the social, environmental and financial impacts all matter and are all measured, and that operate in a competitive market environment with ensuing accountability, transparency and efficiency. Impact investing recognizes that “profit cannot be the sole [my emphasis] criterion,” but rather each action in business “is always a moral — and not simply economic — act.”
More generally, impact investing reminds us that no business should want to profit in ways that harm other persons or the environment, and thus that all corporations should care about their social and environmental impacts (and not just their financial bottom line).
Laudato Si’ helps us with the critical task of re-forming our consciences, relationships and habits.