Séamus P. Finn
« Faith Consistent Investment Guidelines »
Linda Hogan, João J. Vila Chã, Michelle Becka
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1. Vatican Context
Catholic Social Teaching (CST) has offered a consistent stream of teaching and reflections on the different financial systems that countries have adopted and followed over the last 150 years. They have consistently evaluated and commented on the positive and negative features of these systems and judged their impacts through the lens of human freedom and dignity and their respect for and promotion of the common good. More recently this has included an integration and evaluation of the burden that the economic activity of both the public and private actors in these systems has visited upon the planet and local and regional ecologies.
The administration and operations of the Vatican and the policies and practices that guide its economic and temporal activities have received additional scrutiny as the CST tradition has evolved and published new ethical and moral principles and expectations for both believers, catholic institutions and catholic business leaders who operate and participate in financial transactions and commercial activities. Requests for access to the guidelines and policies that the Holy See follows in the administration and management of the temporal affairs of the Vatican City State (VCS)[1] have increased especially when they interface with sovereign and regional regulators that manage and monitor regional and global financial activities and when they use intermediary financial institutions to conduct financial transactions. Guidelines and policies for managing the fixed and liquid assets of the VCS are often included in this scrutiny especially if the Holy See advocates for certain policies when participating in public forums and recommend specific policies and actions to believers and other institutions.
2. Praxis of Faith Consistent Investing (FCI)
Faith based institutional investors have engaged in the praxis of aligning the management of their assets with the beliefs, values and principles of their respective traditions for decades and in some instances even longer. This praxis emerged from a deeply held sense of moral responsibility for the ownership and management of their assets in a way that was consistent with the teaching and practice of their traditions.
In recent decades, technology has facilitated speedy access to data and transparency, made it easier for owners and investors to realize this goal and to demand greater accountability from consultants and asset managers. In addition, the availability of research and analysis of past performance data and specifically the measurement of the impact of and faith or values criteria on the financial performance of a portfolio has convinced many faith-based asset owners to include this practice in the management of their portfolios.
The documents of Vatican II and subsequent Catholic Social Teaching called for greater authenticity and integrity in reflecting the example and teaching of Christ across all aspects of ecclesial administration and operations. An example of this call is found in the synodal document “Justice in the World” which was published in 1971 and states “While the Church is bound to give witness to justice, she recognizes that anyone who ventures to speak to people about justice must first be just in their eyes.”[2]
Many church institutions and organizations have embraced this teaching in the management of their assets and established or adopted the policies, tools and resources to realize this objective. At least three conferences of Catholic bishops have published statements and guidelines on how to realize this vision[3] The USCCB; the Germans and the French.
3. Process
In 2014 the former Pontifical Council for Justice and Peace, now the Dicastery for Promoting Integral Human Development, in conjunction with the IOR initiated a process that would lead to the publication of a document on FCI that would serve as a resource for the Holy See and for Catholic institutions and organization across the world. The document seeks to acknowledge the good work that has already been accomplished by many Catholic institutions and organizations and at the same time to encourage those who have not adopted this practice to seriously consider doing so as a witness to their Catholic identity, service to the common good and care for the earth, “our common home”.[4]
The document reviews the teaching of the scripture on the threefold relationship between Creator, Creature and Creation and the guiding principles that are laid down to govern those relationships. “Doing righteousness and justice” (Gen. 18:19) is realized through fidelity to God and his covenant and a reverential concern for the neighbor and creation. It then reviews the tradition in the Church Fathers and the scholastics as they reflected on the nature of “lending”, “interest” usury and the role of banking and insurance. The final section of this review examines the core principles of Catholic Social Teaching that are presented in the Compendium of Social Doctrine[5] and in addition the principle of “integral ecology” that is prominent in Laudato Sí.
After providing this foundation the document goes on to present the basic frameworks and perspectives that have informed those already active in Faith Consistent and Socially Responsible Investing. First and foremost, these include the practice of “negative screening” which identifies those sectors, companies or activities that the faith consistent investor will want to exclude from their portfolio.
More recently many are examining more closely the practice of “positive” social impact investing whereby investors seek to deploy their assets projects and funds whose objective is to play a constructive role in promoting development and enabling social and ecological entrepreneurship.
Finally, the document provides a list of the practical steps involved in following or establishing a Faith Consistent Investing program and identifies the policies, resources, tools that can guide those institutions that are starting out on this journey. This checklist will hopefully provide a roadmap for those who have been hesitant to take up this missionary opportunity and support constructive and conversations within institutions
4. Conclusion
The praxis of FCI and Socially Responsible Investing has evolved through several stages over the past fifty years. The recognition of the influence and power of publicly listed corporations especially those with an international and now global footprint served to awaken those shareholders to a consideration of their personal and institutional responsibility as owners. As shareholders recognized that companies relied on their capital to grow their businesses and to accelerate and expand when opportunity presented itself they also became more aware of the tools that were available to fulfill their responsibilities as owners.
In the beginning a small number of shareholders chose to avoid investing in some industry sectors all together because of their beliefs or values and others chose to engage the managers of corporations that were in their portfolios about products, policies and practices that they considered morally objectionable. Over time and through experience these efforts produced different sets of social and environmental guidelines that were considered alongside the financial guidelines that investors followed in their decision making.
Research and advances in technology have rendered these activities more accessible and reliable and therefore provided the opportunity for more investors to integrate the practices into their asset management approaches. This has included reliable research that demonstrates that the impact of the integration of social and ecological considerations into the investment process has little or no impact on the financial return.
It is hoped that the preparation and publication of this document will encourage the Church, the Vatican City State and Catholic institutions and individual believers to more fully embrace this practice and see it as an opportunity for greater alignment and integration of their beliefs into the management of their assets, promotion of the common good and care for the earth “our common home”. In addition, the embrace of this activity will be an opportunity to shine the light and teaching of the tradition into this dimension of the financial system to infuse more wholesome and ethical principles into its operations.
Notes
[1] Lateran Treaty Between The Holy See and the Kingdom of Italy (February 11, 1929), http://www.vaticanstate.va/content/dam/vaticanstate/documenti/leggi-e-decreti/Normative-Penali-e-Amministrative/LateranTreaty.pdf. For a scholarly exploration of the VCS’s legal structure, see Stephen E. Young and Alison Shea, Separating State from Church: A Research Guide to the Law of the Vatican City State (99 Law Library Journal – 2007), https://scholarship.law.edu/cgi/viewcontent.cgi?article=1781&context=scholar; as occasionally updated at Alison Shea, Updated: Separating State from Church: A Research Guide to the Law of the Vatican City State (2012), retrieved March 9, 2018, http://www.nyulawglobal.org/globalex/Vatican1.html.
[2] Synod of Bishops, Justice in the World (1971), 40.
[3] United States Conference of Catholic Bishops; “Socially Responsible Investment Guidelines”; 2003;
German Bishops Conference, “Making Ethically-Sustainable Investments”; A guide for persons in financially responsible positions in Catholic institutions in Germany; 2015. Conference of Bishops of France, “Vade Mecum No. 3-2010; 2007.
[4] Pope Francis, Laudato Sí, (2015), 129.
[5] Pontifical Council for Justice and Peace, Compendium of the Social Doctrine of the Church, Libreria Editrice Vaticana, 2004.
Author
Séamus P. Finn is responsible for the Faith Consistent Investing program for the Oblate Investment Pastoral Trust www.oiptrust.org. He is also Director of the Justice/Peace and Integrity of Creation Ministry of the Missionary Oblates of Mary Immaculate. Rev. Finn has represented the Oblates at the Interfaith Center on Corporate Responsibility www.iccr.org in New York since 1988 and currently serves as the ICCR board chair.
Address: 391 Michigan Ave, Washington DC 20017.
