A short history of Sustainable finance - episode #1


The origins: religion, morals, and investment

The rich rules over the poor, and the borrower is the slave of the lender. (Bible, Old Testament, Proverbs 22:7)

“No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.” (Bible, Evangile, Matthew 6:24)

"Allah will deprive usury of all blessing, but will give increase for deeds of charity" (Quran 2: 276).

In the beginning, were morality and religion. Finance has not always been about profit only. In many cultures, and in the main religions, it has often been linked with moral values and considerations. Investment is no exception to this rule, and responsible investment is strongly linked to this history.

18th century: the Quakers invent Responsible Investment

The history of socially responsible investment (SRI) starts in the 18th century, when the Quakers, a religious group born in England who had migrated to America, decided that they would refuse to invest in any economic activity linked with slavery.

Not only did they decide to invest differently, but also they invented strategies to do so.

1920s: Banning the “Sin stocks” in America

In the 1920s, religious congregations created the first socially responsible funds in the United States of America. They wanted to avoid investing in what they called « sin stock »: alcohol, pornography, tobacco, gambling, etc. Thus, they created the « exclusion strategy » meaning that they banned from their investment any company that behaved in a way that would go against  their principles.

1960s, Social and political movements 

In 1960s the SRI movement started to take its independence from religious influence. The idea of responsible investment was developed with the socio-political events of the time such as the Vietnam War (chemical weapons), the Apartheid policy in South Africa, nuclear weapons, human rights, etc. At this very moment, the SRI movement started to take a more secular and militant approach. 


1972 : The Pax World fund

However, the religious influence did not decrease. Indeed, in 1972, two priests created the fund Pax World which is considered the first socially responsible investment modern fund. This fund is considered the first in history to implement the best-in-class approach. 

In parallel, religious finance extends to many religions : Islam, Christian, Jewish, etc. 

To be continued...


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