c. 2003 Religion News Service

PARIS _ It was not divine inspiration, but worldly need that drove Sister Nicole Reille to seek salvation in the stock market.

Two decades ago, the French Roman Catholic nun invested the money of her aging order of Sisters of Notre Dame, into the convictions they preached: Companies that did right by their employees, the environment and developing countries; that were not involved in tobacco, or arms, or pornography.

In doing so, Reille helped found France’s first ethical investment fund.

Over the years, new orders and lay speculators risked their francs on the nun’s venture. The fund prospered, and new ones mushroomed. Reille’s actions became closely followed by the media and investors alike. Companies that once gave the sisters polite but short shrift, began sending top executives to plead their cause.

Finally last year, Reille set off for Rome, to preach the virtues of ethical investment to other congregations, and to the Vatican’s bankers.

Her tale should end there _ or perhaps with an epilogue, recounting how the private sector and the Catholic church forged a golden future under Reille’s benevolent guidance. Instead, the French nun arrived in Rome and hit a wall.

Her counterparts had other interests at the Vatican, appearing content to leave investment matters to their congregations back home. The Vatican bankers told Reille “merci,” but they knew all about ethical investing already.

“They told me, `don’t you worry we’re ethical,”’ recalled the rosy-cheeked, 73-year-old nun of the conversation, during a brief summer visit to Paris.

“But they have no interest at all of dialoguing with companies, which we’ve been doing, to try and improve their ethical behavior. But dialogue’s the most important part. Not just assuming the funds are well managed.”

With her wavy white hair, thick glasses and easy-going smile, Reille appears more an amiable grandmother than a savvy businesswoman, with a knack for communicating with CEOs. She has been undervalued before.

Eyebrows were first raised in 1983, when Reille started France’s first ethical fund, backed by money from her Notre Dame order. For the nuns, the stock market’s appeal was clear: Few promising alternatives existed to bankroll their work, much less their retirement.

The nuns looked to budding ethical investments programs in Britain and the United States for inspiration. They drafted a list of 20 funding criteria, ranging from whether companies hired handicapped or immigrant workers at home, to whether they encouraged economic development in poor countries.

Their first fund, New Strategy, seemed a nice idea, but not necessarily a sound one.

“At first people were amused,” said Laurence Loubieres, an analyst at Meeschaert Bank in Paris, which manages New Strategy, along with a second fund, Ethical Action, launched by the nuns in 1998. “They didn’t think nuns could be interested in money questions. That got a lot of play in the media.”

“But people started to get interested,” Loubieres said. “People were concerned about a sustainable environment, and long-term development. Bit by bit, this investment took off. And the nuns were the pioneers.”

Pioneering has paid off. The two funds created by Reille have averaged 8 percent growth yearly, although their value dived almost a third following the stock market downturn. Some 80, mostly female, religious orders have since joined the fund, along with a smattering of lay people.

The nuns do not attend board meetings. But over the years, they have analyzed their different portfolio sectors, inviting company bosses and employees over for questioning. As the daughter of a French steel executive, Reille adapted easily to the hard-nosed corporate world.

“My background helped me,” she said. “When I see directors of big enterprises, I’m not afraid to talk to them. It allows me to speak on an equal level.”

Whether the sisters have fundamentally changed business behavior, however, is a matter of debate.

“Nicole Reille has established a dialogue with these companies, and today we can say they are showing interest in ethical issues,” said Jean-Maurice Lochard, head of Apoge, a French portfolio management company specializing in ethical funds. “But does it really change their behavior?” he asked. “I’m not so sure.”

(OPTIONAL TRIM BEGINS)

Nor have the nuns attracted much interest from male congregations. Priests and monks account for only a small slice of their stockholders.

“We’re always astonished that the male congregations and diocese participate so little in our effort,” said Sister Michelle Barrot, appointed the funds’ new head after Reille moved to Rome.

“That’s not to say they’re not concerned about this kind of management,” Barrot added, diplomatically. “But as female, international congregations, we live very close to poor people. This kind of understanding helps us draw political lines.”

Lochard offers a blunter assessment. “Priests are also savvy with the stock market,” he said. “But they’re less preoccupied by establishing ethical and moral guidelines for their investments.”

(OPTIONAL TRIM ENDS)

In Rome, the Vatican’s money men also have looked askance at the newly arrived French nun, already offering investment advice, even if her counsel is regularly sought by bankers and congregations in Europe and elsewhere.

The Vatican’s current investment guidelines are unclear. Several calls and a faxed letter from a reporter went unanswered by the Vatican bank, known formally as the Institute for Religious Works.

During her talks with Vatican bankers, Reille said, she was told investment guidelines generally follow church philosophy and would include, for example, rejecting companies dealing with abortion pills. Beyond that, she was told, the Vatican had limited ethical sway with companies in which it had limited investment.

“I said we don’t have 50 percent (of the) shares in companies, but we talk to the press,” Reille recounted, with a smile. “That gives us weight.”

Reille has since drafted a new approach _ to eventually offer the Vatican an established set of Europeanwide guidelines, as a working basis to develop its own ethical investment rules. She is working on the European scheme with Lochard, and with a handful of like-minded specialists.

In France, at least, Reille is confident ordinary investors will continue to follow the nuns’ financial lead. “A lot of people have said, `well the nuns are involved, so it must be good,”’ she said. “It’s not because we do things better than others _ maybe we do them worse. But it gives the investments a certain pedigree.”

DEA END BRYANT