By Kurt Gabbard • Posted August 1, 2023

In recent years, socially responsible investing has gained considerable momentum as individuals and institutions seek to align their financial decisions with their values. The Catholic Church has long been at the forefront of this movement by emphasizing the importance of ethical considerations consistent with Catholic Social Teaching when managing financial assets.

The United States Conference of Catholic Bishops (USCCB) has set forth guidelines for socially responsible investing, highlighting their commitment to protecting human life, promoting human dignity, enhancing the common good, pursuing economic justice, and practicing environmental stewardship.

Those guidelines recognize the inherent dignity of every person, from conception until natural death, and emphasize the need to respect and protect human rights in all aspects of life, including financial decision-making. In the context of socially responsible investing, this principle means avoiding investments in companies engaged in activities that violate human rights such as human trafficking, child labor, or the production of weapons of mass destruction. The guidelines also stress the imperative of avoiding investments in companies involved in activities that violate the sanctity of life.  Investors are encouraged to actively support companies that prioritize fair labor practices, uphold workers’ rights, and promote economic justice.

Another crucial aspect of the USCCB Guidelines for Socially Responsible Investing is environmental stewardship. The USCCB advocates for investments in companies that embrace sustainable practices, promote renewable energy, and minimize their carbon footprint and discourage investments in industries that harm the environment.

Integrity and ethical conduct in business are paramount as are transparency, accountability, and responsible governance.

In addition to investment decisions, the guidelines emphasize the importance of active shareholder engagement to influence corporate behavior in a positive fashion. They encourage investors to exercise their voting rights and engage in dialogue with companies. Shareholder advocacy enables investors to be catalysts for change, urging companies to align their practices with Catholic Social Teaching principles.

To implement these guidelines for socially responsible investing, the bishops recognize the importance of collaboration with investment managers, investment management firms, consultants, and experts in the field. Such interaction allows for the development of screening tools and strategies to identify investments that align with Catholic values. These screening tools often  consider environmental, social, and governance (ESG) factors, helping investors make informed decisions based on the company’s overall impact on society.

The Catholic Foundation of Greater Philadelphia’s (CFGP) investment policy follows the USCCB Guidelines for Socially Responsible Investing. CFGP recognizes that many corporations have broadly diversified operations, and the Investment Committee limits investment in any security that has material revenues determined as unacceptable as set forth by Guidelines. Generally, the materiality test states that not more than 10% of a corporation’s total revenue be invested in a service or industry that is contrary to Catholic social teaching. If a corporation exceeds that limit, then it is removed from the investment pool. After screening out companies that do not meet the Guidelines, our investment advisors then optimize the portfolio to achieve a rate of return consistent with the portfolio’s return objectives and asset allocation model.

Over the past ten years, CFGP’s investments have consistently outperformed the benchmark. CFGP’s fund holders can have peace of mind that their funds are being managed in a manner that is both fiscally prudent and consistent with their Catholic faith and values.

The  USCCB’s Guidelines for Socially Responsible Investing reflect the Church’s commitment to promoting human dignity, environmental stewardship, and ethical business practices. By encouraging investors to align their financial decisions with their values, the US Bishops aim to create a more just and sustainable society. The guidelines provide a framework for Catholic individuals, institutions, and organizations to make informed investment choices that contribute to the common good while fostering positive change in the corporate world.

To learn more about Catholic giving opportunities or how to establish a donor advised fund at CFGP, please visit TheCFGP.org or contact kgabbard@TheCFGP.org.

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Kurt Gabbard is the Chief Financial Officer for the The Catholic Foundation of Greater Philadelphia.