by Joe Bollig
KANSAS CITY, Kan. — When it comes to financial stewardship, religious organizations must pay attention to three “M’s”: mission, money and morals.
Catholic institutions have recognized for years that there is no benefit in a good return on institutional investments that undermine their foundational moral and ethical standards.
That is why the U.S. Conference of Catholic Bishops have issued investing guidelines since 1991. During their November 2021 general assembly, the bishops again updated the document, “Socially Responsible Investment Guidelines for the United States Conference of Catholic Bishops.”
As the guidelines point out, “economic decisions have human consequences and moral content.”
The guidelines “form our investment strategy and are the lens through which any individual investment opportunity is evaluated,” said Bishop Gregory L. Parkes of the Diocese of St. Petersburg, Florida, who led the revision effort.
For this revision, the bishops even took into account an increasingly popular approach using Environmental, Social and Governance criteria (ESG), which is primarily secular.
The guidelines were written to assist the USCCB with its institutional investments. But many religious communities, Catholic institutions and dioceses also use the USCCB’s socially responsible investment guidelines to help them make investment decisions that conform with church teaching.
The USCCB investment strategy stands on three pillars: 1) avoid doing harm; 2) work for change; and 3) promote the common good.
The investment policies fall under five major categories: 1) protecting human life; 2) promoting human dignity; 3) enhancing the common good; 4) pursuing economic justice; and 5) saving our global common home.
The Archdiocese of Kansas City in Kansas also uses the bishops’ guidelines, said Carla Mills, archdiocesan chief financial officer.
“In layman’s terms, we want to put our money where our Catholic values are. So, we don’t want to invest in enterprises that go against our Catholic values,” said Mills. “We’re not going to invest in companies that produce pornography, abortion, weapons of mass destruction or pollute the environment unnecessarily.”
The archdiocese doesn’t scrutinize investments on a stock-by-stock basis, said Mills. Rather, it hires consultants who “screen” investments for compliance with Catholic values. The archdiocese uses Investing for Catholics, a division of Index Fund Advisors, Inc., based in Irvine, California; and MPC Capital Advisors, New York, New York.
Investing for Catholics, for example, is not a fund manager. It selects and monitors fund managers to ensure they are choosing investments for Catholic clients that closely align with the USCCB guidelines.
There are a couple of challenges to socially responsible investing. One is that different people have different ideas about what is and isn’t ethical or moral. A second is the complexity and interconnectedness of businesses and investments.
Differing approaches to Environmental, Social and Governance criteria illustrate the challenge of differing morals and ethics. The bishops’ guidelines have their environmental and social components but make value judgments that differ from secular ones.
“A non-Catholic would look at ESG through an entirely different lens than a Catholic,” said Mary Brunson, co-founder and vice president of Investing for Catholics.
ESG means different things to different people.
“The label itself means nothing,” she said. “You have to dig down and look at specific criteria. What are you including? What are you excluding? What are you underweighting?”
So, it’s possible to invest according to Catholic values on an institutional basis, but what about Catholic individuals? Can they invest according to their faith, too?
Brunson said they can.
“There are a handful of funds out there on retail platform that they can use, but they tend to be costly, and they tend to be concentrated,” she said. “You have to find an investment adviser who understands the guidelines and who understands how to go about doing it. We are one of a very small handful of firms that can do this. We work with individuals and institutions.”
It’s a question of finding a fiduciary adviser who has access to institutional share classes that are screened for Catholic values.
It’s possible for an individual to build a Catholic portfolio, but it’s difficult, said Fred Weiss, managing member of MPC Capital Advisors.
“There are commercial enterprises offering mutual funds that purport to adhere to these,” said Weiss. “You could certainly read the guidelines and do it on your own if you were so inclined, so there are certainly people out there trading their own portfolios, which I would discourage in general.
“If you were so inclined to buy mutual funds or index funds, there are [those] you could buy that adhere to those Catholic principles.”
Individuals who are doing socially responsible investing on their own need to ask questions. Does the company sponsoring these products just offer them or are they living the mission? Are the fees reasonable? Ask about compliance — do they avoid evil and do the good?
Individual investors need to educate themselves, he said. A good place to start is the internet. Inquirers should use the search terms “Catholic investing,” “Catholic socially responsible investing,” “Catholic ethical investing” and “Catholic screened mutual funds.”