The current trend is to encourage foundations and other nonprofit groups to invest their funds in a way that is aligned with their social mission. But why not take it one step further and include faith-based, values-investing? That is, participating in socially responsible investing that is aligned with the organization's mission and possibly centered around religious beliefs?
Dharma Investments Ltd has partnered with Dow Jones Indexes to launch the first major, faith-based investment product in India. This is about values-based investing and many Indian spiritual leaders and scholars are supporting this new process.
How does it work?
The Dow Jones Dharma Index measures the performance of the companies selected according to the values and principles of the Dharmic religions such as Buddhism and Hinduism. The Dharma Index will be screened by academic advisors and religious practitioners. The key principles include non-violence, respect for all forms of life, compassion and loving-kindness.
According to the author of the article in Asia Times Online, the Dharma India Index features "stocks compliant with the code of moral conduct according to Hinduism, teachings of the Buddha and which also incorporate principles of the Sikh and Jain religious tenets - together, ways of life with billions of followers in Asia and forming nearly 20% of the human race."
The Index aims to serve the needs of socially conscious investors. The companies must pass certain environmental and corporate governance screenings and other qualitative filtering before it is included in the Index. The list is reviewed each quarter. Some companies are automatically excluded due to the nature of their business and activities.
Colorado-based Dharma Investment group, a faith-based investment boutique firm came up with the idea. CEO Nitesh Gor says that "the principle of dharma contains precepts relevant to good conduct, but also the implicit requirement of mindfulness about the sources of wealth -- and therefore responsible investing."
What is the demand?
Socially responsible investing is a new concept in India but faith based investing is not. In 1999, Dow Jones also pioneered the Islamic Market Indices that adhered to certain principals in Islamic law. Companies included in that Index cannot operate businesses in gambling or produce pork or alcohol.
The market for socially responsible investing encompasses about 10% of the $24 trillion of total investments. The 250 or so companies in the Index has a total market capitalization of $919 billion.
Dharma stocks are not for everyone. They have their own special niche of investors - those that are willing to take a lower return if the company they invest in adheres to certain principles. The market has basically come up with a solution for those wanting to invest based on their beliefs, similar for those wanting to invest in environmentally-friendly companies.
Photo courtesy of Aman Walia & Nishita Bakshi