E&F Advice & Administration
Sustainable & Impact Investing
May 05, 2022
Catholic Principles for Faith-Based Investing
Faith-based investing is unique from other areas of mission-aligned investing in that many religious denominations follow predetermined guidelines available for investors to either use or adapt to their needs. Depending on one’s particular faith or set of values, guidelines may exist from that practice’s leadership that enable the investor to think about best practices and adapt to their own interests.
Investors — both religious institutions and individuals of faith — can amplify their voices by enacting mission-aligned strategies that couple positive screening with shareholder engagement tactics. For instance, faith-based investors can identify strategies that seek opportunities to vote their shares to advance environmental, social and governance (ESG) issues. Glenmede has worked with investors of various faiths to vote their shares to ask companies to disclose greater data.
The Catholic faith has clear principles for faith-based, socially responsible investing. Bishops first approved the U.S. Conference of Catholic Bishops (USCCB) Socially Responsible Investment Guidelines governing investments of the USCCB in 1991 and updated them in 2003. Although written to guide investments of the USCCB, the guidelines reflect Christian tradition as a whole, drawing on universal church teachings and USCCB guidance.1 The guidelines are intended to provide policies that model the USCCB’s investments and other activities related to corporate responsibility. Further, the guidelines provide an accessible framework for dioceses, colleges and church organizations striving to make investment decisions that align with their faith while meeting financial needs.
In November 2021, the bishops updated guidelines to include wider limits on where money may be invested and advance a policy of engagement on corporate practices that impact human dignity.2 The update adds guidance in areas such as telecommunications, media and social impact investing as well as an emphasis on shareholder engagement and environmental issues. The policy further expands consideration of steps ranging from no investment to engaging corporations on their business practices.
The policy also seeks to “maintain investments to allow for efforts to encourage companies to improve labor standards, encourage social, environmental and financial responsibility, adopt ethical and responsible banking and support affordable housing initiatives.”3
The categories from the 2003 guidelines were revised and streamlined from six to five.4 Some of the restrictions have been recategorized and new ones added. The five categories are:
- Protecting Human Life
- Promoting Human Dignity
- Enhancing the Common Good
- Pursuing Economic Justice
- Saving our Common Home5
Among other updates, “Saving our Common Home” is a new category in 2021. This category addresses climate change, biodiversity and environmental impact. Impact investing was elevated from an optional strategy to a specific policy in the 2021 guidelines.
The revised guidelines are not without controversy, however. The revisions include new restrictions under the category “Protecting Human Life” as well as restrictions related to gender reassignment and family.
Some organizations may choose to follow the guidelines closely, while others may choose to incorporate certain elements to their own investment policies. Still, the guidelines provide a baseline for Catholic organizations, dioceses and charitable non-profits to consider their own investment policies and mission-driven guidelines.
Faith-based organizations striving to be true to their values have long considered the correlation between their investments and their missions. At the end of the day, mission-aligned investing can fulfill an institution’s financial goals while paving the way for a healthier and more just world. With the path to more good works laid out before them, organizations need only to take the first step.
At Glenmede, we have the deep experience necessary to help organizations take that step, customizing investment solutions that can align with your organization’s mission, vision and values. We can collaborate with your team to implement the best practices and strategies for you, mindful of the guidelines of faith-based investing. Our fiduciary mindset is a core value that drives our singular focus: putting your organization’s interests first. The desire to build strong relationships is ingrained in the Glenmede culture, and it is why you can expect highly personalized, attentive and responsive service.
Please reach out to your Glenmede Relationship Manager or email EFSolutions@Glenmede.com to learn more about how we can customize a portfolio that aligns with your organization’s faith-based values and mission.
1Grabowski, J.S. “The USCCB Catholic Socially Responsible Investing Guidelines and the Catholic Investor.” Knights of Columbus Asset Advisors, July 2020.
2Sadowski, D. “Bishops Approve New Socially Responsible Guidelines.” Catholic News Service, Nov. 17, 2021.
4Categories in 2003: Protecting Human Life, Promoting Human Dignity, Reducing Arms Production, Pursuing Economic Justice, Protecting the Environment and Encouraging Corporate Responsibility.
5“Socially Responsible Investment Guidelines for the United States Conference of Catholic Bishops” (Washington, DC: USCCB, 2021).
This presentation is intended to provide a review of issues or topics of possible interest to Glenmede Trust Company clients and friends and is not intended as investment, tax or legal advice. It contains Glenmede’s opinions, which may change after the date of publication. Information gathered from third-party sources is assumed reliable but is not guaranteed. No outcome, including performance or tax consequences, is guaranteed, due to various risks and uncertainties. Clients are encouraged to discuss anything they see here of interest with their tax advisor, attorney or Glenmede Relationship Manager.