Diana Clement: Weeding out ungodly companies

Some of the most memorable conversations happen around the dinner table even though 90 per cent of what is said is soon forgotten. But when the conversation at my dinner table turned to the virtues of giving to charity as opposed to selling goods on TradeMe, the seed of a story was sown.

My friends, committed Christians, said the Bible had many references to being a good steward with one's money and, therefore, selling unwanted belongings on TradeMe was acceptable. What other advice, I wondered, might the Bible have about my personal finances?

Financial planner Alan Milton, of Diversified Investment Strategies in Cambridge, believes the Bible holds many lessons for investors. He quotes the parable of the three servants in Luke 20.

Each is given money to look after while the boss was away. Two invested it, made a profit and were well rewarded on his return. The third took a cautious view, hid the money and made nothing - not even interest in the bank. He was fired.

The Bible's many parables about money are often interpreted differently. Tithing, where church-goers contribute one-tenth of their income, is followed in some denominations and not others.

While most, if not all Christian churches agree that giving to charity is an indisputable requirement, not all want their members to tithe a fixed amount.

Milton says Christian investors often want to avoid companies that make money from gambling, alcohol or armaments as well as countries with less than shining human rights records.

But it can be difficult to ensure a company you invest in or its underlying investments don't support ungodly activities.

"Oil companies go where there is a profit to be made by investing in oil production," Milton says, without much in the way of recourse to ethics. As a result, some clients baulk at investing in oil companies.

People who want to invest their money according to Christian principles have few options tailored directly to them, says Milton, although ethical funds often meet the same needs. But thanks to New Zealand's small size, these funds are few and far between.

Tower closed its Global Responsibility Fund but the Asteron Socially Responsible Investment Trust is still in business.

Overseas, there are plenty of ethical funds to choose from and some New Zealand financial planners put clients' money there.

The paucity of Christian and socially responsible investments is one that Robert Howell, board member of the Council for Socially Responsible Investment, is looking to address.

The council was set up to promote ethical and sustainable investments to develop guidelines, investments and methods for socially responsible investment. It does not plan to change the behaviour of business directly, instead hoping to establish benchmarks so funds reach ethical destinations.

Howell, a Quaker, wants to promote socially responsible investments to investors and the council hopes to create a directory of financial professionals with an interest in such investments.

WHAT THE BIBLE SAYS...

The Bible has at least 2300 verses that refer to money and material possessions. Phillip King, a Tauranga-based financial planner, believes we can all learn lessons from it.

"Financial self-discipline, wealth through diligence, security and proper management, integrity and a commitment to share with others are all found within," he says.

King's pick of pertinent Bible verses include:

Self-discipline and success

A faithful man will abound with blessings, but he who hastens to be rich will not go unpunished. Proverbs 28:20.

He who loves pleasure will be a poor man; he who loves wine and oil will not be rich - there is desirable treasure and oil in the dwelling of the wise, but a foolish man squanders it. Proverbs 21:17,20

Wealth through diligence or pain by shortcut

He who tills his land will be satisfied with bread, but he who follows frivolity is devoid of understanding. Proverbs 12:11

Education and skills development are rewarded with advancement, for us to be the very best we can be. Proverbs 22.29

Indebtedness

The rich rule over the poor and the borrower is servant to the lender. Proverbs 22:7

Be diligent to know the state of your flocks and attend your herds; for riches are not forever. Proverbs 27: 23-24

Integrity

Do not rob the poor because he is poor, nor oppress the afflicted at the gate; for the Lord will plead their cause and plunder the soul of those who plunder them. Proverbs 22:22-23

He who oppresses the poor to increase his riches, and he only gives to the rich, will surely come to poverty. Proverbs 22:16

Sharing with others

Remember the words of the Lord, that He said, it is more blessed to give than receive. Acts 20:35

Some give freely, yet grow richer; others withhold and only suffer want. Generous folk will be enriched and one who gives water will get water. Proverbs 11:24-25

ISLAM AND MONEY

Christian investors may be able to sidestep ungodly investments. But if you're a New Zealand Muslim, the financial maze is one that's virtually impossible to navigate without breaking sharia (Islamic law).

Muslims who follow their religion strictly are not permitted to pay or receive interest and are forbidden from investing in companies involved in alcohol, tobacco, armaments, genetic engineering, pornography, financial institutions, gambling and pork products.

The ban in "riba" or interest makes it impossible for devout Muslims to open a bank account, invest in a term deposit, take out a conventional mortgage or pay into a pension. Provided they pay their bills on time and don't incur interest, Muslims can use credit cards.

Ian Perry, partner enterprise risk services at Deloittes, says although New Zealand has 40,000 Muslims, there are no financial products aimed at them.

In Britain and United States, which have estimated Muslim populations of 2.5 million and 5 million, mainstream banks and financial institutions offer Islamic products.

They work in many ways, but the most common are bank accounts where the financial institution invests deposits and pays a profit share each month instead of interest and mortgages.

When it comes to mortgages, the Murabaha principle is used: The bank buys the property and sells it back to the individual at a higher price. The home owner then makes a fixed payment each month.

Perry says in New Zealand Muslims must either break sharia and open interest-bearing accounts or rely wholly on their community - investing in Muslim businesses and borrowing from friends and family to buy houses.