From the Vatican, a ‘good measure’ of investment guidance

In 2022, The Vatican’s Pontifical Academy of Social Sciences released Mensuram Bonam (“Good Measure”), a 46-page document on faith-based measures for Catholic investors. The guide encourages investors to integrate Catholic social teaching into their investment decisions and offers a model by which institutions can establish clear investment policies consistent with those teachings.

In the United States, many Catholic institutions and investment firms follow the U.S. Conference of Catholic Bishops’ Socially Responsible Investment Guidelines, which were first published in 1991 and updated most recently in 2021. The USCCB guidelines reflect the conference’s own investment policies but are likewise recommended “to others who wish to be both ethical and responsible to the common good in the investments they make,” states the introduction.

The 2021 USCCB revision maintains a strong stance against investments in companies that support evils like abortion, pornography, human cloning, contraceptives, and certain weapons of war but adds to that list of exclusions practices such as euthanasia, assisted suicide, in vitro fertilization, gender reassignment treatment or surgery, human rights violations, gambling, tobacco, and recreational cannabis. In addition, the 2021 update says investors “should not” invest in companies that violate certain environmental standards or fail to comply with the UN Global Compact Environmental Principles launched in 2000.

The USCCB update also encourages investors to become more proactive in engaging with corporations so as to encourage positive change and in seeking new impact investing opportunities that support Catholic social teaching.

Mensuram Bonam takes a similar approach to moral and ethical investment decisions, arguably going further to propose an integration of Catholic social teaching with elements of so-called “environmental, social, and governance” issues, or ESG, which encompass broad concerns such as climate change and sustainability. Although noting flaws in ESG, the Vatican document draws these issues more intimately into the conversation.

Christians First

Catholic investment experts familiar with Mensuram Bonam are of mixed opinion as to how the new Vatican guidelines should affect Catholic investor practices.

“Catholic investors are Christians before they are investors. This, to me, is the foundational contribution of Mensuram Bonam,” said Patrick Kelly, supreme knight of the Knights of Columbus, which offers investment services through Knights of Columbus Asset Advisors. “It is a reminder to Catholics around the world that every decision we make with our resources is a moral decision.”

Mensuram Bonam “underlines the reality that there are companies whose products, practices, and commitments are immoral, and that Catholics must both acknowledge that fact and make good, moral decisions that correspond,” stressed Kelly, a member of the Fairfield County Chapter.

The document goes beyond the simple identification of moral dangers, he pointed out. 

“It also issues a compelling call to consider our investing as a source — a means — of doing good,” said Kelly. “It urges Catholics to ‘put our money to work’ serving the common good, protecting our common home, and protecting and building up human life.”

He acknowledged that like the USCCB’s own guidelines, the Vatican guide leaves room for discernment and prudential judgment in making investment decisions.

“I don’t expect that everyone will draw the same practical conclusions,” said Kelly. “What is clear, though, is that Catholics cannot not engage in discernment in their investments.”

Mensuram Bonam is careful to draw distinctions between Catholic social teaching on investing and the popular ESG concerns that occupy so many companies today: the document, Kelly noted, clearly states that “ESG is not a synonym” for Catholic social teaching.

Some deeply important dimensions of the Church’s social teaching escape the ESG lens. Mensuram Bonam notes that a firm could score high on ESG criteria while producing or marketing a product incompatible with the norms and values of the Catholic faith. 

“Not all self-described ‘moral’ investing is the same,” Kelly said.

Reflecting beliefs

George Schwartz, a 25-year member of Legatus’ Ann Arbor Chapter who is chairman and CEO of Schwartz Investment Counsel, offered a different take on Mensuram Bonam. He described the document as “a mile wide and a half-inch deep.” 

His Catholic advisory board, he explained, screens out investments that support abortion, stem-cell research, contraceptives, and pornography just as Mensuram Bonam suggests but does not have an interest in other topics the document includes, such as “climate change, green genetic engineering, minerals and mining, armaments, violent games and toys.” 

Ninety-eight percent of his 100,000 shareholders say their primary moral concern is opposition to abortion, Schwartz affirmed.

“I did not find this document to be useful or helpful in managing our funds,” he said. “I applaud it for opposing abortion, but it goes on to address too many things.”

For Chris McMahon, Legatus’ vice chairman of the board and founder of MFA Wealth and Aquinas Wealth Advisors, Mensuram Bonam provides an opportunity to reflect on the oversized influence of the “Big Three” investment firms — BlackRock, Vanguard, and State Street — which collectively are the largest shareholder in most S&P 500 firms. These firms leverage this position to promote ESG investing and lead companies to pursue high “Corporate Equality Index” scores as determined by the Human Rights Campaign, an LGBTQ+ lobbying group.

The result of that “Big Three” influence, he said, is that leaders of companies who otherwise would have little interest in the culture wars are pressured to support legalized abortion, celebrate homosexuality and transgenderism, and advocate policies in line with critical race theory — problematic issues that often get attached to the ESG agenda.

“They have the power to approach the boards of the companies and tell them, ‘If you don’t support these things, we can vote you out,’” McMahon said.

He encouraged Catholic investors to make use of new technology to analyze their investments in order to discover whether companies they fund or might consider funding support agendas opposed to their faith. 

“We need to be proud of our Catholic faith and ensure our investments reflect what we believe,” he stated.

Time for self-examination

Kelly believes Catholic business leaders should take the moral analysis of both Mensuram Bonam and the USCCB guidelines and look at their own business practices, products, and commitments in light of each. 

The Knights follow USCCB guidance in informing their investment process, he said, with multiple layers of screening and safeguarding as well as an ongoing process of evaluating potential securities.

“These documents offer a chance for deeper reflection on what leaders can do through their businesses in order to promote the good,” he said. “What do my products accomplish? How can I treat my employees with the dignity they deserve? What kind of culture am I creating in my business, what are our commitments, and how can the business help people — especially families — flourish?”

In this confused moral moment, “It’s imperative that Catholic business leaders not only avoid evil but also serve as beacons for what a moral Christian business looks like,” Kelly said. “We can bear witness to the fact that you can be successful in business and foster the common good.”

‘Neither the first nor the last word’

“It is important for all of us, especially investors, … to act, talk and meet on a regular basis to monitor, review, and propose adjustments to the shared project (and shared responsibility) for integral development in all its forms. Sharing in such dialogue is critical considering, in particular, the permanent process of innovation that is taking place in the financial sector. Neither the first nor the last word on faith-consistent investing, [Mensuram Bonam] will continue to contribute to the flow of good measures.” — Mensuram Bonam, 51