Episode 36 - Capital = Influence with Finny Kuruvilla
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Finny Kuruvilla, CIO at Eventide Funds, challenges faith-driven investors to consider the impact of their investment decisions.
Hear him remind us that there is an ethical responsibility on the part of the investor to know the impact of their funds. He explores examples of how investors have used their influence to inspire significant world change and encourages modern-day faith-driven investors to do the same.
Episode Transcript
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Rusty Rueff: Welcome back everyone, to the Faith Driven Investor podcast. If you were able to attend the FDI conference this year, we're so glad to have you join us because today's podcast is going to feel familiar, but we think you'll probably want to hear it again and again. Finny Kuruvilla shared how capital creates influence and what it looks like for faith driven investors to steward that responsibility. Well. It's a poignant reminder for all of us, and we're grateful to him and the whole team at Eventide for thinking through this topic. Listen in. Enjoy. And let us know what you think.
Finny Kuruvilla: How do you change the world? I'm not looking for platitudes or nice sentiments. I'm looking for tangible, practical strategy rooted in sound principles. Our world is changing rapidly and not always for the best. Thus, for good reason. There's a lot of talk today about how to change the world for the good. There's a lot of young people who hope to use their lives to change the world. And there's a lot of older people who want to use their influence to change the world. So how do you actually do it? Let's first dispel two common myths of world change strategies. First, the power to change the world is not found in politics. Politicians make lots of promises they rarely keep. They've got to make lots of deals and concessions to get them elected, which in turn makes them beholden to other constituencies. And then on top of that, politicians have their fingers up to figure out which way the wind is blowing so that they get reelected. But what makes that wind blow? Politicians in general are much more reactive than transformational. The second myth is that world change happens because of autonomous individuals, especially in America, where we tend to lift up rugged individualism. It's easy to fall for this myth. In his book To Change the World. Sociologist James Davis at Hunter makes a compelling argument that the real power to change the world lies with institutions. Certain institutions have concentrated power to shape hearts, attitudes and beliefs. Think of school systems, churches, Hollywood, social media or the news. Certain institutions have concentrated power to affect how you spend your time. Think of professional sports leagues, for example. By the way, these leagues are for profit businesses and how many millions of hours that people spend watching those activities, or how many young people dream of being like Michael Jordan or LeBron James? Renaldo. Serena Williams. There's other institutions that have concentrated power to shape spending. Think of the people who make commercials. Think of all the online businesses like Amazon or brick and mortar places like shopping malls. It's difficult to overstate all of these forces. In fact, we're a little bit like fish that swim in water, but we can't tell you what water is because it's our only experience. In the book of Colossians. Paul talks about Dominion's principalities and powers that are both visible and invisible. These forces define and shape our existence. And if you can change these forces, you can change the world. I'm going to be focusing mostly on business here, but I want to illustrate world change with two historic examples. Let's start with the very famous voyage of Christopher Columbus. Most of us know he wanted to get to India, but this enterprise of trans oceanic sailing was risky and expensive. You needed investors to supply the capital for such an endeavor. So Columbus traveled all around Europe looking for investors. He unsuccessfully went to France and England to procure these investors after failing there. He eventually got support from Spanish investors. Make no mistake about it, this was very much a business proposition. Columbus took their capital and in exchange for his labor, he arranged a contract where he personally would get 10 percent of future revenues from such expeditions. And he also got the option to invest in one eigth, a future commercial businesses that came from his explorations. Now, the rest of his voyage is history. But I want us to think for a moment about an alternative narrative. What if Columbus secured French investors? Central and South America today would be French speaking and have a very different culture. What if Columbus secured British investors? Central and South America would be English speaking and Protestant, not Catholic? Think of the hundreds of millions of people affected by this small group of investors and explorers. These investors that backed Columbus changed the world. As a second example, consider the British East India Company that was formed in sixteen hundred. Many people consider this to be the first modern corporation financed with a complex mixture of stocks and bonds, and they even had an exchange through the influence of this company. India would go on to become a colony of England that has affected the culture, the language and the politics of India. And you may not know that India has the second largest English speaking population on the Earth. Billions of people have been changed by the geopolitical power of these corporations. Now let's jump to the future. Consider the modern multinational corporation. How much has Google, Facebook and Nike changed our habits, our desires and even our vocabulary? Companies were funded by venture investors as well as public investors. These investors changed the world through these companies. Want to change gears a little bit and talk a bit more about some of the ethics. The thesis that I'm going to lay out is very simple. By willfully becoming an owner of a company or an owner of a business, which is what investing is, you are sanctioning and benefiting from the company's activities and practices. This ownership confers an ethical responsibility to the investor for the activities and practices of the company. Investing has long been, however, divorced from this original and basic purpose, which is supplying capital to support businesses. Instead, most investors today are trying to profit from the market itself rather than any productive and intrinsic value of the underlying companies. Basically, investing today has become about making money. The mantra is low cost, low fee products like ETF and investing has become commodities and depersonalized. Frankly, most people don't even know what companies they own. Investors have forfeited the power to change the world using their hard earned capital to convince you of a more modern example of the positive power investing. I want to share one last example of what can happen if we work together. Let's go to the year 1971. In 1971, Christians were having a growing concern for apartheid. If you don't know what apartheid is, it's an Afrikaans word. That means separation. It literally means a part hood. It's basically institutionalized racial segregation. Apartheid was practice, of course, in South Africa. And the government had already ignored U.N. sanctions and embargoes. But a group of Episcopal shareholders filed a shareholder resolution with General Motors, a well-known car company. Many people believe this to be the first example of modern shareholder Abigail. They enrolled the help of a Baptist minister whose name was Leon Sullivan. He was an anti-apartheid activist. And Sullivan proposed specific resolutions for the General Motors board that they ended up adopting because of this Episcopal shareholder resolution after GM adopted these resolutions. Then Ford and Goodyear followed suit. Thus, one of the key instruments in the fall apartheid was coordinated investor pressure from Christians think of the many, many problems that we face today, lack of access to clean water, polluted air, difficult jobs, diseases like cancer, Alzheimer's infections like coronavirus, educational systems that can warp students minds, misinformation and confusion in the media. Every one of these problems could be fixed through institutions, specifically virtuous businesses and a strong church. These are the sleeping giants that we can enable through our investing and participation. Right now, we need all of us to deploy our capital in positive ways to shape the world for the good. Using biblical principles that promote human flourishing. So let's use investing as a tool to positively change the world.