October 14, 2009

Investing in good faith

By James J. O'Brien

The theme for this year’s U.S. Conference of Catholic Bishop’s Respect Life program is “Every Child Brings Us God’s Smile.”  As faithful Catholics, we recognize and honor the sanctity of the gift of human life.  Yet, how is it possible that even the most truly devout Catholics may find themselves to be unwitting participants in supporting the abortion of that very child that carries “God’s smile”? The answer to that question is actually quite simple: ignorance.  St. Paul exhorts, “Therefore, do not continue in ignorance, but try to understand what is the will of the Lord” (Eph 5:17).

Ignorance is defined as a lack of knowledge.  In this situation, the knowledge we are lacking is realizing that our investment dollars are funding activities that violate the core values and teachings of the Roman Catholic Church.  In addition to abortion, we may find ourselves funding pornography, anti-family entertainment and non-marital or alternative lifestyles.  For most Catholics, funding of these activities is through ownership of individual stocks or mutual funds that seek to accommodate or promote these evils to increase profitability.  The sad truth is that billions of dollars are being poured into companies that have absolutely no conscience when violating the moral values that are the cornerstone of our Catholic faith. This certainly is not the “will of the Lord.”

Fortunately, there is a concept called Morally Responsible Investing (MRI) that allows us to invest without compromising our values.  You may be familiar with the forerunner of Morally Responsible Investing, Socially Responsible Investing (SRI).  Socially Responsible Investing is a broad-based approach to investing that as of 2007, according to the Social Investment Forum, encompasses an estimated $2.71 trillion out of a $25.1 trillion in the U.S. investment marketplace; that is $1 out of every $9 invested!  Again according to the Social Investment Forum, 10 years ago there were 80 SRI mutual funds available, five years ago, that number had increased to 130 mutual funds and today, there are 170 funds to choose from.  Fifty percent of the growth in the number of SRI funds in the last five years has been faith-based. 

Socially Responsible Investing recognizes that corporate responsibility and the concerns of society are integral parts of investment decisions.  Socially responsible investors encourage corporations to improve their practices on environmental, social and governmental issues.  You may be familiar with other SRI-like approaches to investing referred to as mission investing, responsible investing, ethical investing, sustainable investing or green investing.  There are essentially two methodologies that investors use in Socially Responsible Investing: screening and shareholder advocacy.  Screening, which includes both positive and negative screens, is the practice of evaluating investment portfolios or mutual funds based on the selected criteria.  Shareholder advocacy involves socially responsible investors who take an active role as owners of corporate America. 

The latest redefining of SRI, Morally Responsible Investing (MRI), is based on the moral demands posed by the virtues of prudence and justice.  It is interesting to note that the U.S. bishops adopted and began to implement Socially Responsible Investment Guidelines in 1991.  The bishops were truly the pioneers of what we would call today, Morally Responsible Investing.  Practitioners of MRI currently seem to favor the methodology of screening over shareholder advocacy.  We can reasonably expect that an investment portfolio based on Catholic values will, at a minimum, screen for abortion, pornography, anti-family entertainment and non-marital or alternative lifestyles. 

Screening for abortion may include manufacturers of abortifacients, hospitals, insurance companies, philanthropy, fetal tissue research and cloning.  Pornogra-phy encompasses advertisers, establishments, film, internet, retail outlets and television.  Anti-family entertainment encompasses advertisers, film, games, internet, print, audio, retail outlets and television.  Non-marital or alternative lifestyles encompasses advertisers, establishments, film, games, GLBT group recognition, internet, philanthropy, print, promotion, audio, retail outlets, sponsorship and television.

After reviewing the list of potentially offensive activities, it is easy to see how we can fail to be good stewards of God’s gifts by being ignorant of exactly what immoral activities our investments are funding.

James J. O’Brien, CFP, is a member of St. Thomas More Church in Centennial. O’Brien offers securities and advisory services through Multi-Financial Securities Corporation, member FINRA, SIPC.