The motivations and intentions of investors have long been part of the dialogue around meaningful investing. The generally accepted definition of impact investing requires intentionality as a prerequisite, even in investments that clearly have a positive impact.
[blockquote author=”” pull=”pullleft”]Some may choose to invest in their local neighborhoods, as a manifestation of the principle that the poor of your city take precedence (ani’i ircha kodmim), or investing in clean energy bonds as an expression of do not destroy (baal tashchit).[/blockquote]
Judaism is widely acknowledged for regulating every aspect of human life, including food, shelter, sex, rest, etc. Can it possibly have nothing to say about how we invest our money?
How can we identify the Jewish values that should guide our investments? Every investor should consider the following:
- Why we invest. How are our investments an extension of our values? What, specifically, are the values in our lives that govern our investment decisions?
- How do we invest? What are the procedures, institutions, and stakeholders we engage in the investment process?
- What do we invest in? What types of products and vehicles do we invest in? How do these investments impact the world?
We can begin by exploring the themes underlying Jewish economic thought. Perhaps the most fundamental principle of the traditional Jewish economic system is the divine origins of wealth. Judaism sees humans as merely temporary stewards of wealth, therefore permitting individual wealth to be directed towards religious and communal ends. The best known example of this principle is the shmitah—the practice of forgiving all debts and ceasing agricultural work during every seventh year.
Judaism recognizes the individual human pursuit of basic needs, so long as this pursuit happens under the sanctity of Jewish law and in a manner that also contributes to collective welfare and gains. This idea is first found in the story of the creation, where Adam is given dominion over the earth and the animals on it, but at the same time is commanded to “tend it and keep it”. Our individual responsibility is to grow and protect individual and communal resources.
In short, Judaism does not accept the separation between an individual’s actions as an economic agent and as a moral agent. The Jewish values that guide investing must both encourage personal gains, and fulfill one’s responsibilities as a steward of wealth. We invest out of a belief that our actions can influence both our individual and collective future, in a manner that is aligned with the Jewish ideal of a virtuous life and just society.
Few ideas are more associated with Jewish life than community (Kehila). In both law and practice, from the ancient tribes, through the shtetls of Europe, to modern-day vibrant Jewish communities, Jewish communal life and collaborative learning and debate have been the backbone of Jewish continuity.
The strengths and benefits of Jewish community can be integrated in different ways into the investment process, according to the different types of investors, asset classes, and investor preferences. The benefits of the communal structures include:
- Explicit framing of motivations and intentions. The community allows dialogue and reflection that is hard to achieve in isolation.
- Sharing of best practices and the opportunity for communal learning.
- Multiplying the impact of investments through communal effort.
Finally, Judaism reminds us to stay true to our values throughout our business dealings, When discussing matters of money, the Bible makes a point of referring to the other party as your brother, to remind us that our actions affect the wellbeing of people like us. Investment decisions are moral decisions, and throughout the due-diligence process, screening of investments, negotiation of terms, we must continue to treat our counterparts as our brethren, and not a means to an end.
Like the broader impact investing sector, the final outcome of investing with Jewish values includes a wide breadth of investment. These can impact Israel, the global Jewish community, or non-sectarian causes related to Jewish principles.
For some investors, the Israeli economy, either as a whole, or in specific impact themes or sectors, is an obvious impact investment choice. For example, Israel bonds or investing in Israeli public companies offer both financial returns and furthers their Jewish agenda. At LAVAN, we highlight the work of Israeli startups tackling global challenges in education, healthcare, poverty alleviation, and the environment.
Other investors use their capital to affect change in Jewish communities and institutions outside of Israel. For example, Simone Friedman, Head of Philanthropy and Impact Investment for Emanuel J Friedman Philanthropies, has advocated the use of shareholder voting rights held by Jewish investors and institutions to influence the treatment of chickens by kosher meat companies. Additional investment opportunities may include microfinance for Jewish communities, loans to Jewish non-profits, bonds to support Jewish day-schools, and more.
Finally, investors may choose to make investments that may not be labeled as Jewish, but are otherwise aligned with their Jewish values. It is difficult to draw a definitive line around these types of investments, which are open to personal interpretation. Jewish philanthropy and civil society have a long and rich history of supporting non-sectarian causes, though not without debate. Some may choose to invest in their local neighborhoods, as a manifestation of the principle that the poor of your city take precedence (ani’i ircha kodmim), or investing in clean energy bonds as an expression of do not destroy (baal tashchit).
While this final category of investments may seem too amorphous or controversial to be of value, it is none the less important to consider and debate. Under no prudent investment strategy would a portfolio consist solely of investments in Israel and the Jewish community. The majority of the Jewish private and communal assets will always be deployed in diversified financial products, and we must consider how to align these with our Jewish values to the best of our ability.
The impact investing movement has been a part of several trends in investment practices, namely, the emergence of investing groups and clubs, and an unprecedented demand for transparency. At LAVAN, we build off these trends and work to enrich our investment practices by drawing on Jewish practices and the motifs of community and integrity.
Investing can be a Jewish practice when guided and executed by intention, meaning, and purpose. At LAVAN we take a holistic approach to integrating Jewish values into all stages of the investment process by looking at the “Why, How and What” of our investing. We see our investments decisions as an extension of our values, and as an expression of our Jewish identity.
The answers to these universal questions are obviously deeply rooted in subjective value systems. At LAVAN we consider how Jewish values, traditions, and motifs, inform our response to these questions so as to guide and infuse meaning into individual and communal investment decisions.
How do Jewish values influence your investment decisions?
Photo credit: LAVAN Project.
A version of this article was originally published in the Times of Israel.