What to Watch this Week: The Second Vatican Conference on Impact Investing

Since 2014, Catholic Impact Investing has grown into a mainstream player in the space.

In the past few months, we have been reminded of the social investing trend that has grown significantly since 2014 — Impact Investing and the Catholic Church. Articles from Impact Alpha (“More Catholic capital flows toward impact investing”), Devex (“New Catholic Relief Services deal marks first foray into impact investment”), and on Medium (“Why I’m Running an Accelerator in Rome”) make it clear that Catholic interest in Impact Investing is strengthening alongside the mainstreaming of impact investing.

We discovered a lot of insights into Catholic interest in impact investing when we revisited the first and second Vatican Conference on Impact Investing, held in 2014 and 2016.

The first Conference, held June 16–17, 2014, in Rome at the Vatican, was convened by the Pontifical Council for Justice and Peace (PCJP), Catholic Relief Services, and the Mendoza College of Business, University of Notre Dame. The agenda of the two-day symposium revolved around education and awareness of the practice of impact investing, and how organization’s current investment activities could lend themselves to the practice.

During the Conference, the Catholic Church and Catholic organizations illustrated significant common ground between the legacy of social work in the church and the impact focus of this new type of investing. It is true that Catholic groups consistently invest with an eye toward social responsibility, and have recently continued divestment from coal, oil, and gas in the fight against climate change. Beginning the conversations of how impact investing could become a part of the work of Catholic organizations was a natural next step.

The Second Vatican Conference on Impact Investing was held again in Rome, June 26–28, 2016, and was reflective of Pope Francis’ Laudato Si released in 2015. This Conference moved past an introduction to impact investing and began the task of making connections and educating Catholic organizations for the purpose of serving the poor through impact investing. For three days, the agenda focused on connecting capital and social enterprises, and providing evidence, case studies, and exploratory sessions for moving forward into practicing impact investing.

Since the Conference, Catholic organizations have announced impact investing deals, including Catholic Relief Services and Franciscan Sisters of Mary. This week, we looked back at a handful of the conference videos from the Second Vatican Impact Investing Conference held last summer. Almost every session on the agenda has recordings and presentation slides available to watch and download. Here are highlights of what we’ve revisited this week.

Climate Investing


Pope Francis’ Laudato Si from May 2015 greatly stresses the impact of climate change on the poor, and the Pope and Catholic church have consistently highlighted the importance of supporting the family of humanity through economic, social, and climate justice. This session at the Second Vatican Conference on Impact Investing focused on examples of Climate investing for impact. Presenters Dr. Ellen Dorsey of Wallace Global Fund and Congressman John Delaney of Maryland both spoke about the various ways climate investing currently happens and future trends in the space. Moderator Margaret Sullivan began the conversation with an explanation of the social and scientific changes that have occurred since the 2014 Vatican Impact Investing Conference and 2015's Laudato Si: the rise of visibility in the media, and the rise of temperatures confirmed around the world. Dr. Dorsey highlighted the steady transition of the energy economy and market signals given by the Paris Agreement. However, she highlighted ‘uncertainties’ within climate investing, including:

  1. The time-frame of working to stop climate change and the human rights implications of starting quickly; and
  2. Whether the energy transition will be just for all communities, how to leave no one behind.
“We don’t need to think of ourselves as Environmental Investors to invest in Climate solutions… climate change will impact every social justice issue that we care about.” — Dr. Ellen Dorsey

Dr. Dorsey then explained areas the Wallace Global fund practices climate investing:

  • supporting the movement to divest from fossil fuels
  • supporting models of Green Loans funds (the Catholic Climate Covenant)
  • partnering with other philanthropic and faith institutions to launch a global civil society initiative to “end energy poverty by 2030” through calling mission-driven institutions to place 1% of assets in climate investing and work to create community-based partnerships.

Congressman Delaney talked more about legislation recently passed and details around impact bonds, but not before highlighting three major ways climate change is affecting the poor: significant food-price increase; disease; and changes in migration patterns that affect the poorest parts of the world. In order to combat this change, Congressman Delaney zeroed in on the need for investment and the need for innovation. The Social Impact Partnership Act is a recent piece of legislation that supports pay-for-success programs to bring more private capital into solving issues that are viewed to be in the realm of government.

Dr. Dorsey was later asked about the ‘risks’ of climate investing, and related insights that impact investing had a tendency to be hard to scale; and the need for the community to be brought to the table throughout the design and implementation of impact programs. Dr. Dorsey’s final point was a call to set stronger impact investing standards, in order to more accurately measure impact.

Congressman Delaney was asked to speculate the legislative and regulatory needs that are required to drive climate investing. Carbon pricing, investing in research, and empowering the impact investing community were among his answers to the policy changes necessary to promote climate solutions.

Investing to Create a Sustainable Future


Audrey Choi, CEO of the Institute for Sustainable Investing at Morgan Stanley, and Matthew Patsky, CEO of Trillium Asset Management, hosted this conversation about the different types of impact investment capital. They emphasized the range of return expectations — from philanthropic to concessionary to market rate — and the importance of appropriately aligning investor expectations with social entrepreneur needs.

Audrey introduced the session with her own “Trinity”:

  1. The importance of Clarity or “to know thyself”. Investors need to understand the “color of the money” that they are seeking to employ. Is it purely philanthropic (i.e. a grant or donation), a hybrid (such as a program-related investment) or part of an endowment where a financial return is necessary? And social enterprises need to truly understand the purpose of their businesses. If they should never make money from their work (such as disaster relief), they should not partner with investors that require financial returns. Blended model social enterprises should understand if their priority is to make money or to have a social or environmental impact, and pursue investment types aligned with their priority.
  2. The need for Fidelity or “to thine own self be true”. Social enterprises that don’t have robust revenue models should not look for — or accept — investments that require a high rate of return.
  3. The reality of Unity. Investors need to remember that all money can have positive impacts, whether it’s what you don’t invest in, how you use your money to advocate for change, or how you proactively choose impact investments.

Matt then discussed what he wanted the audience (which was equally divided between investment focused and program focused representatives) to walk away understanding:

  1. Impact investing isn’t new. It’s been around under different names and descriptions for hundreds of year.
  2. Impact Investing does not require — but it can have — a sacrifice in returns.
  3. Publicly traded equities and fixed income have place in the impact investing ecosystem.
  4. Fiduciary duty requires investors to consider the mission of the companies they invest in.

Audrey spoke about the evolution of sustainable investing in her experience at Morgan Stanley. When she began in her role around eight years ago, many of her colleagues responded with “that seems lovely — let us know how it works out”. But then clients (especially religious institutions) began asking for responsible options. Now there’s a real business case for considering sustainability in investment decisions. Evidence shows you can preserve or increase return with same or less risk.

After Matt described Root Capital as a case study, the panelists opened up the floor for questions. The audience seemed particularly interested in climate change and how impact investing can address the pace of climate change. Audrey agreed with the urgency and severity of the issue, calling climate change a “massive, pervasive mega-trend” that will affect every industry. It is an investment opportunity and moral imperative. Matt agreed saying that Trillium encourages all clients to divest from fossil fuels.

When the topic of commercializing public goods (such as energy and water) was introduced and the potential of doing so making poor people even poorer, Matt adamantly argued for the need to recognize basic rights and not allowing for-profit entities to take them over.

Measurement for Social Impact

This session honed in on examples and contexts of measuring social impact. The session was largely informative for audience members who were in various stages of implementing social impact monitoring above ESG measurement.

Jeri Eckhart Queenan of Bridgespan Group began with storytelling, linking measurement to meeting the needs of specific vulnerable populations.

“How do we know that the Mercy we offer is the Mercy received?” — Jeri Eckhart Queenan

Queenan was followed by presentations from Dimple Sahni, of Anthos Asset Management, which includes Skopos Impact Fund, a global impact fund focused on measurable social and environmental returns alongside financial returns to promote social justice. Sahni outlined how Anthos views impact measurement as a part of impact management. Through inspiration from measurement frameworks that currently exist and overarching goal setting, Sahni tells the story of how Skopos began the process of creating an impact framework that captures the outcomes of a program rather than the output. Challenges of adverse impacts, aligning the value chain, and aligning the various entities of philanthropy throughout the family office were overcome through a detailed framework and strict structures for impact investing.

The next presenter was Olivia Muiru of B Lab, detailing the process B Lab has created for business to have tools and legal structures to monitor impact alongside their mission. B Lab’s integrated approach to sustainable enterprise and impact monitoring begins with proper infrastructure within the company. Muiru pointed to the B Impact Assessment for proactive measurement, and highlighted the GIIN’s IRIS standards for comparability. B Lab’s main product is B Corp Certification, which requires high levels of measurement and transparency to qualify. This legislative requirement for certification leads to clearer pathways to measurement and evaluation. Muiru made it clear than while not everything can be standardized, B Lab does its best to provide tools, partnerships, and structures for B Corps to measure their entire supply and impact chain. A case study of Vital Capital Fund was then presented. Based in Israel and funding mostly in Sub-Saharan Africa, the fund uses pre-investment due diligence, improvement targets, and GIIRs Rating to measure impact of portfolio companies.

Jaqueline Novogratz, Founder and CEO of Acumen, was then asked to elaborate on some of the work Acumen has completed on lean data in the sector. Since 2012, SMS technology has changed the way organizations collect data from the community. Novogratz highlighted the need to recognize the rigor of impact measurement, moving impact data to the level of financial data. This lean data collection provides valuable insight into:

  • The needs are of the community,
  • How interventions can be meaningful for different groups, and
  • Understanding the differing levels of poverty within certain groups.

This use of direct communication for data collection is powerful and effective, with a 90% response rate when Acumen asks customers for feedback over text message. The use of Big Data for impact measurement is beginning to grow.