Two decades ago, a Roman Catholic order of nuns helped create France's first ethical investment fund - requiring that stock market investments go to companies following strict social and environmental criteria. Today, these socially responsible investments have become popular in France, and elsewhere.
It was not divine inspiration, but worldly need that drove Sister Nicole Reille to seek salvation in the stock market. The year was 1983, and Sister Reille's international order - called Notre Dame - had few options for financing its work and the nuns' retirement.
The sisters needed to make some investments, but they were not interested in just any investments. Instead, they created a special fund that funneled their francs into the convictions they preached - to companies with good records regarding the environment, how they treat their employees and how they operate in developing countries.
The nuns drafted a list of 20 funding criteria - ranging from whether companies hire handicapped or immigrant workers, to whether they encourage economic development in poor countries.
At the time, Sister Reille admitted, many French financial experts raised their eyebrows at the nuns' foray into the stock market. Skeptics considered the sisters idealists, whose ethical investment strategy would not survive the cold, hard realities of the business world. Companies would send representatives to the nuns to talk about possible investments, but only, she believes, out of politeness.
Today, few people are questioning the nuns' methods. After their first fund, New Strategy 50, the sisters launched a second called Ethical Action, in 1998. The two funds have grown at the very respectable rate of roughly eight percent a year - although both suffered during the recent stock market downturn. Some 80, mostly female, Christian orders have since joined the funds, along with a sprinkling of lay people.
Last fall, Sister Reille's order sent her to Rome, where she preached the virtues of ethical investment to other branches of the Roman Catholic Church, and to the Vatican bankers. But she said she did not get the response she expected.
The French sister said her counterparts from other congregations were not interested in talking about investment. The Vatican bankers told Sister Reille they already knew all about ethical investments, and said they were not interested in her suggestions.
Vatican bankers did not reply to requests for an interview for this report. But Sister Reille assessed the Vatican's criteria for socially responsible investments as rudimentary.
Elsewhere, the advice of Sister Reille, and like-minded French nuns, is being taken more seriously. Sister Reille travels regularly overseas to meet with bankers and religious orders about ethical investments.
And in France, financial analysts like Laurence Loubieres say it was Sister Reille and her colleagues who helped launch a nationwide interest in socially responsible investment.
Ms. Loubieres firm, Meeschaert Bank of Paris, manages the nuns' two funds. She says popular concerns about global warming, deforestation and poverty in developing countries, helped fuel French investment in these ethical funds. Other experts say recent scandals regarding mismanagement in major international firms like Enron also pushed many French investors to funnel their money into companies with good ethical records.
Today, roughly 100 funds claiming to be socially responsible exist in France, most founded by banks and other non-religious institutions. Many companies have also hired ethics specialists, who promote their firms' good qualities. Still, the ethical investment movement in France is modest compared to those in the United States and Britain. But experts say the trend is gathering pace. Eighty percent of the ethical funds in France were created between 1999 and 2002.
That includes a fund started three years ago by a prominent French relief group, the Catholic Committee Against Hunger and for Development.
The Catholic Committee's finance director, Bernard Mazzaschi, said the group's first ethical fund has fallen roughly 30 percent in value since it was launched in the midst of the world economic slowdown. But Mr. Mazzaschi said, new Catholic congregations are still joining the fund. He said their investments are for the long term - and he predicts that sooner or later, the fund will begin earning a profit.
One of the goals of ethical investments is to pressure companies to adopt more ethical business practices. The success of that effort is the subject of some debate. In addition, there are disagreements over what constitutes an ethical investment. The concept can be used as a political tool, as some groups call on investors not to put money into countries whose policies they do not like.
Still, Sister Reille said the emergence of new ethical rating agencies in the 1990s has forced companies to worry about their social standards. The rating agencies now report on the ethical behavior of every company on the French stock market. And Sister Reille is working with professional investment experts to develop a set of guidelines for ethical investment she hopes will be adopted by investors throughout Europe, including those at the Vatican.