The Vatican hosted an unprecedented conference last month, in which Pope Francis stressed the importance of using capital to address global poverty and inequality.
What type of business conference involves Morning Prayer? You might be thinking, “the ones on the Wall Street in late 2008." But here is a more recent one: on June 16th and 17th, a conference on impact investment called “Investing for the Poor” took place at the Vatican. Pope Francis in his welcome speech emphasized:
Investments of this sort are meant to have positive social repercussions on local communities, such as the creation of jobs, access to energy, training and increased agricultural productivity. The financial return for investors tends to be more moderate than in other types of investment. [...] It is important that ethics once again play its due part in the world of finance and that markets serve the interests of peoples and the common good of humanity. [...]In this regard, speculation on food prices is a scandal which seriously compromises access to food on the part of the poorest members of our human family. It is urgent that governments throughout the world commit themselves to developing an international framework capable of promoting a market of high impact investments, and thus to combating an economy which excludes and discards.
Forbes’ Rahim Kanani conducted an interview with Dr. Raj Shah, Administrator of the U.S. Agency for International Development (USAID), who talks about his experience in the conference and how it extends to the issue of using impact investment to address extreme poverty around the world:
One of the conference’s greatest contributions is highlighting the fact that there is a real opportunity for investors to achieve two goals simultaneously: economic returns and making a significant contribution to poverty alleviation. Social impact investing as a model is working, but the world’s poorest people still pay the most for things like clean water and basic health services. In his address to the conference, Pope Francis applauded efforts by impact investors to “turn to financial institutes which will use their resources to promote the economic and social development of [impoverished people and communities] through investment funds aimed at satisfying basic needs associated with agriculture, access to water, adequate housing and reasonable prices, as well as with primary health care and educational services.” And I too believe there is an opportunity there—to bring down costs, to create new solutions that help move people out of poverty, and to earn a return on investment. We can accomplish this by scaling-up impact investments, both in terms of breadth and scope, and by partnering with faith-based institutions and investors to achieve our common goals. We will certainly remain engaged with the Vatican, and we are grateful for their efforts to end extreme poverty through unique approaches.
In 2007, the term “impact investment” was coined to describe the type of investment that serves social good while generating financial returns. Through the conference last month, Pope Francis demonstrated his optimism about this way of harnessing private capital to fight poverty. You may also be interested in an interview with Vatican Radio’s Linda Bordoni.