First in a three-part series on Catholic Responsible Investing
If Catholics aren’t careful when they choose their investments, they could be profiting from and funding companies that promote abortion or other activities deemed morally offensive by the Catholic Church, experts say.
“If you are Catholic the issue is, ‘Is it morally correct for me to own a piece of a company that is making money through an activity that is against Catholic Church teachings?’ That’s the bottom line,” said Greg Wolfe, Diocese of Little Rock’s finance director.
The concept on a broad scale is known as Socially Responsible Investing (SRI), refusing to invest in ventures that a person deems socially irresponsible, which can include everything from tobacco to companies causing pollution. It is individualized by a person’s passion — the environment, future growth, human rights, etc.
“It’s a big wide range. Environmentalists are real strong in SRI and then there are all the religious groups. I know there are mutual funds that are directed toward various religious persuasions: Jewish, Catholic, Evangelical,” Wolfe said.
For Catholics, there is a subset known as Catholic Responsible Investing (CRI), which takes into consideration the tenets of the Catholic faith when it comes to investing. The early days of the SRI phenomenon had its beginnings in morality issues with the Pioneer Fund in 1928, which rejected companies that manufactured alcohol and tobacco, according to “Socially and Biblically Responsible Investing,” a 2015 Liberty University senior thesis by Adam Stalcup.
It started to gain more traction in the 1960s when investors did not want to support the Vietnam War. During the 1980s, the South African apartheid movement drove many retirement funds to stop supporting businesses working in South Africa, Stalcup explained.
Today, responsible investing has become increasingly popular, Wolfe said. According to a 2013 Forbes magazine article, in a two-year span SRI investing jumped 22 percent totaling $3.74 trillion in managed assets. It further stated that about $1 out of every $9 professionally managed in the United States can be considered SRI Investment. According to The Forum for Sustainable and Responsible Investment, an association that focuses on SRI, the start of 2014 saw $6.57 trillion in SRI.
“The data is so much more available,” in terms of firms getting access to offer socially responsible screening,” Wolfe said. “The other side of the coin is that investment companies seem to understand the value to their business in understanding what is important to various groups of investors in society.”
For entities like the Diocese of Little Rock, CRI can be easier to follow because there are more investment firms offering this service to institutional investors. For the Catholic individual, knowing where to start is a challenge but not impossible, Wolfe said.
In 2003, the U.S. Conference of Catholic Bishops released CRI guidelines for their own organization and those can be a good starting point for Catholic investors. The guidelines are only required for USCCB investments and not other Catholic entities or individuals.
“For instance, if a company is involved in any way in the activity of abortion, the USCCB will not invest in them, even if they make $1 a year from it,” Wolfe interpreted, based of USCCB guidelines for their organization. “If they are involved in making artificial birth control pills, or abortifacients, the USCCB will not invest in them” or also “any production of a weapon of defense that could be a first-strike nuclear weapon,” because of the Church’s teachings on nuclear war. (See sidebar for further guidelines).
Applying the USCCB guidelines requires judgments by the company providing the CRI screening.
An example would be the prohibitions against owning companies that deal in pornography. Avoiding investments in a pornography production company is easy and there are only a few, but what about cable companies or hotel chains that profit from offering pornographic video options to customers?
“It’s easy to decide up on a high level, but then someone has to make judgments,” Wolfe said. “There are companies that do that for SRI investors.”
Part 2 next week: Exploring Catholic-based mutual fund options and advice from CEOs of Ave Maria Mutual Funds and Epiphany Funds.
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