Catholic Values Investing: What is it?
Investing with Catholic values is more than a financial strategy; it's a commitment to aligning one's investments with the moral and ethical teachings of the Catholic Church. The United States Conference of Catholic Bishops (USCCB) has provided guidance to help Catholics navigate the complex world of investing while remaining faithful to church teachings. This approach, often termed "Catholic values investing" or "faith-based investing," emphasizes stewardship, social responsibility, and respect for human dignity.
Core Principles of Catholic Values Investing
The USCCB offers a framework that addresses several key areas where Catholic teaching intersects with financial investment. These principles are grounded in the Church’s teachings on social justice, human dignity, and the common good.
1. Respect for Human Life
At the heart of Catholic teaching is the sanctity of human life from conception to natural death. Therefore, investments that support or benefit from activities contrary to this principle, such as abortion, euthanasia, IVF or embryonic stem cell research, should be avoided. Catholic investors are encouraged to avoid companies involved in these practices or products, ensuring that their investments do not contribute to the devaluation of life.
2. Promotion of Human Dignity
The USCCB emphasizes the importance of upholding human dignity in all aspects of life, including labor. This principle calls for investments that respect workers' rights, promote fair wages, and ensure safe working conditions. Companies that engage in exploitative labor practices, human trafficking, or discrimination violate this principle. Therefore, Catholic investors are advised to support businesses that honor the dignity of their employees and contribute to the betterment of society.
3. Social and Environmental Responsibility
Catholic values investing also requires a commitment to environmental stewardship, reflecting the Church's teaching on the care for creation. This includes avoiding investments in companies that harm the environment through pollution, deforestation, or unsustainable practices. The USCCB encourages investment in firms that adopt environmentally friendly practices and contribute to the sustainability of the planet.
In addition to environmental concerns, Catholic investors should also consider the social impact of their investments. This includes supporting companies that contribute positively to society, such as those involved in affordable housing, clean water, education, and helping those in poverty. Conversely, investments should be avoided in industries that perpetuate social harm, such as those involved in the production of weapons of mass destruction, tobacco, or pornography.
4. Corporate Governance and Ethical Conduct
The USCCB's guidelines also stress the importance of ethical corporate governance. This means that companies should operate with transparency, accountability, and integrity. Catholic investors are encouraged to engage with companies as active shareholders, advocating for ethical practices and holding corporate leaders accountable for their actions. This can include voting on shareholder resolutions that promote social responsibility, lobbying for changes in company policies, or divesting from companies that consistently fail to meet ethical standards.
5. Avoidance of Scandal
An essential consideration in Catholic values investing is the avoidance of scandal. This principle is rooted in the idea that investments should not only be ethically sound but should also avoid giving the appearance of endorsing immoral activities. The USCCB cautions against investments in companies whose practices might lead to public scandal or harm the Church’s witness in the world. This requires careful consideration of how investment decisions might be perceived by others and the potential impact on the Church’s mission.
Implementing Catholic Values in Investment Strategies
For individual investors, implementing these principles requires careful selection and ongoing monitoring of investments. Many financial institutions offer products and services tailored to Catholic values investing, including mutual funds, exchange-traded funds (ETFs), and managed accounts that align with USCCB guidelines.
Screening and Exclusionary Strategies: Investors can use screening strategies to exclude companies that conflict with Catholic teachings. This often involves working with financial advisors who specialize in faith-based investing or using investment tools that screen for ethical considerations.
Positive Impact Investing: Beyond simply avoiding harmful investments, Catholic investors are encouraged to seek out opportunities that have a positive impact on society.
Shareholder Advocacy: Active engagement with companies as shareholders is a powerful tool for promoting Catholic values in the corporate world. By participating in shareholder meetings, voting on resolutions, and engaging in dialogue with corporate leaders, investors can influence companies to adopt more ethical practices.
Diversification and Prudence: While aligning investments with Catholic values, it is also important to maintain a diversified portfolio to manage risk. The principle of prudence in Catholic teaching supports making sound financial decisions that balance the moral implications of investments with the need for financial security.
Conclusion
Catholic values investing, as guided by the USCCB, offers a way for individuals to align their financial choices with their faith. By adhering to principles that respect human life, promote human dignity, ensure social and environmental responsibility, and encourage ethical corporate governance, Catholic investors can contribute to a more just and compassionate world. This approach not only seeks financial returns but also aims to reflect the teachings of the Church in every aspect of life, including how one's money is invested. Through careful selection, active engagement, and a commitment to ethical practices, Catholic investors can ensure that their investments are consistent with their moral and spiritual values.
Do you have interest in aligning your portfolio with your Catholic values? Please contact phil@foundationwealthplanning.com to schedule a no obligation review of your portfolio and audit any places that could help you align more with your values.
God Bless,
Phil Francois, CFP®
www.foundationwealthplanning.com