by Joe Bollig
KANSAS CITY, Kan. – When it comes to financial management, religious organizations should pay attention to three “Ms”: mission, money and morals.
Catholic institutions have recognized for years that there is no benefit in getting a good return on institutional investments that undermine their fundamental moral and ethical standards.
This is why the United States Conference of Catholic Bishops has issued investment guidelines since 1991. At their general assembly in November 2021, the bishops again updated the document “Socially Responsible Investment Guidelines for 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 review, the bishops even took into account an increasingly popular approach using Environmental, Social and Governance (ESG) criteria, which is above all secular.
The guidelines were written to assist the USCCB in its institutional investments. But many religious communities, Catholic institutions, and dioceses also use the USCCB’s Socially Responsible Investing Guidelines to help them make investment decisions consistent with Church teaching.
USCCB’s investment strategy is based on three pillars: 1) do no harm; 2) working for change; and 3) promoting the common good.
Investment policies fall into five broad categories: 1) protection of human life; 2) promote human dignity; 3) improve the common good; 4) pursuing economic justice; and 5) save our global common home.
The Archdiocese of Kansas City in Kansas also uses guidelines from bishops, said Carla Mills, chief financial officer for the archdiocese.
“Simply put, we want to put our money where our Catholic values are. So we don’t want to invest in companies that go against our Catholic values,” Mills said. “We are not going to invest in companies that produce pornography, abortions, weapons of mass destruction or needlessly pollute the environment.”
The archdiocese does not review investments on a case-by-case basis, Mills said. Instead, it hires consultants who “screen” investments to ensure they are in line with Catholic values. The archdiocese uses Investing for Catholics, a division of Index Fund Advisors, Inc., based in Irvine, Calif.; and MPC Capital Advisors, New York, New York.
Investing for Catholics, for example, is not a fund manager. He screens and monitors fund managers to ensure they choose investments for Catholic clients that align closely with USCCB guidelines.
Socially responsible investing presents some challenges. The first is that different people have different ideas about what is ethical or moral and what is not. The second is the complexity and interdependence of businesses and investments.
The different approaches to environmental, social and governance criteria illustrate the challenge of different morals and ethics. The guidelines of the bishops have their environmental and social components but make value judgments that differ from secular judgments.
“A non-Catholic would look at ESG from a totally different perspective than a Catholic would,” 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 in and look at specific criteria. What do you include? What are you excluding? What are you underweight? »
So it is possible to invest according to Catholic values on an institutional basis, but what about Catholic individuals? Can they also invest according to their faith?
Brunson said they could.
“There are a handful of funds on the retail platform that they can use, but they tend to be expensive and they tend to be concentrated,” she said. “You need to find an investment advisor who understands the guidelines and knows how to go about it. We are one of the few companies that can do this. We work with individuals and institutions.
It’s about finding a fiduciary advisor with access to institutional share classes sorted on 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 mutual fund trading companies that claim to be on board,” Weiss said. “You could definitely read the guidelines and do it yourself if you wanted to, so there are definitely people who trade their own portfolios, which I would generally discourage.
“If you were so inclined to buy mutual funds or index funds, there is [those] you could buy that adhere to these Catholic principles.
People who do socially responsible investing on their own have to ask themselves questions. Is the company sponsoring these products simply offering them or living the mission? Are the fees reasonable? Ask about compliance – do they avoid evil and do good?
Individual investors need to educate themselves, he said. A good starting point is the Internet. Applicants should use the search terms “Catholic Investing,” “Catholic Socially Responsible Investing,” “Catholic Ethical Investing,” and “Catholic Select Mutual Funds.”