Vatican Publishes Ethical Investing Guidelines

Church says underlying factors of ESG investing “resonate” with the aims of Catholic teachings.

The Roman Catholic Church has published ethical investing guidelines it says are intended to encourage “systematically integrating Catholic Social Teaching into investment policies.”

The 45-page Mensuram Bonam (Good Measure, in Latin), was put out by the Pontifical Academy of Social Sciences, an advisory body of scholars to the Vatican, and seeks to apply the teachings of the Catholic Church as related to economics and finance.

“Since finance has taken on a larger role at every level of human activity, the need for the Church to reflect on the requirements of Christian discipleship, including the vocation of persons to stewardship in this arena, has become more critical,” Cardinal Peter Kodwo Appiah Turkson wrote in the foreword for Mensuram Bonam. “It is important that their stewardship of created goods, including all forms of financial activity, especially asset management, be directed to reflect this gift of God to the human family, by serving the common good, respecting justice and ethical standards.”

According to the guidelines, many of the underlying factors for environmental, social and governance investing “resonate with the aims underlying CST, creating a potential for new synergy between value and values.” The document said that faith-based investing should enhance “the practical measures for environmental performance with moral terms from social justice and integral ecology; or infusing governance metrics with ethical norms for human dignity, solidarity, and the care for our common home.”

However, the document emphasized it is “crucial” to point out that “ESG is not a synonym” for Catholic Social Teaching.

“Like other responsibility initiatives for markets, ESG remains a work in progress,” the document said. “As yet, there are no internationally ascertained and validated evaluation criteria. … Any ESG evaluation therefore needs to be scrutinized by the priorities and criteria for faith-coherence.”

The church also insisted that faith-based investing does not conflict with an investment manager’s fiduciary duty.

“It is often assumed that mixing faith and ethics with investment criteria may compromise returns. Such concerns have largely been refuted,” the document said. “When faith and ethics criteria are developed with the adequate levels of consideration and expertise, there should be little to no fear of underperformance. … Indeed, there is a growing acknowledgement that responsible investing can deliver equal or better ultimate performance (mensuram bonam) over the long term.” 

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