The Church offers crucial and valuable principles to apply in the midst of a complex and powerful economy. This teaching provides a prudent strategy where decisions can be made by following the moral teaching of the Church. From a Catholic perspective, ethical and socially responsible investing requires us to evaluate specific investments in terms of how those companies or entities protect life, promote human dignity, act justly, enhance the common good and provide care for the environment.
Two principles of stewardship guide this path of socially responsible investing:
- Exercise responsible financial stewardship by obtaining a reasonable rate of return on investments to meet fiduciary responsibilities and mission
- Ethical and social stewardship in investments involve strategies based on Catholic moral principles.
From these two principles a strategy can be developed including:
- Avoid doing harm
- Actively work for change
- Promote the common good
There are five major categories for investment policy and with Earth Day in April, this month we are focusing on the fifth category related to an environmental strategy.
“The book of nature is one and indivisible: it takes in not only the environment but also life, sexuality, marriage, the family, social relations: in a word, integral human development. Our duties towards the environment are linked to our duties towards the human person…”
- Actively invest in companies whose business models are consistent with the emission reduction goals of the Paris Agreement.
- Encourage companies through dialogue, proxy voting and support of shareholder resolutions to establish greenhouse gas emission reduction goals and provide disclosure around low-carbon planning.
“Caring for ecosystems demands far-sightedness, since no one looking for quick and easy profit is truly interested in their preservation. But the cost of the damage caused by such selfish lack of concern is much greater than the economic benefits to be obtained. Where certain species are destroyed or seriously harmed, the values involved are incalculable.”
- Actively encourage companies through corporate dialogues, proxy voting, and support of shareholder resolutions to demonstrate high standards of protection for living organisms and terrestrial, marine, and other ecosystems.
- Avoid investing in companies that have caused specific instances of biodiversity loss, or whose practices have significantly contributed to biodiversity loss and have not worked toward correcting or remediating the damage their operations have caused.
Water and Natural Resources:
…it is not possible to sustain the present level of consumption in developed countries and wealthier sectors of society, where the habit of wasting and discarding has reached unprecedented levels. The exploitation of the planet has already exceeded acceptable limits and we still have not solved the problem of poverty… Fresh drinking water is an issue of primary importance, since it is indispensable for human life and for supporting terrestrial and aquatic ecosystems. Sources of fresh water are necessary for health care, agriculture, and industry.”
- Avoid investing in companies whose activities directly contribute to depletion and/or degradation of available water, without mitigating these impacts
- Encourage companies through corporate dialogues, proxy voting, and support of shareholder resolutions to employ water saving policies and technologies along with other means of saving water.
We have to accept that technological products are not neutral, for they create a framework which ends up conditioning lifestyles and shaping social possibilities along the lines dictated by the interests of certain powerful groups… We have the freedom needed to limit and direct technology; we can put it at the service of another type of progress, one which is healthier, more human, more social, more integral.
- Actively encourage technology companies through corporate dialogues, proxy voting, and support of shareholder resolutions to employ and enforce guidelines that promote the dignity of the human person and protect the environment. Technology companies have a particular responsibility to ensure that they promote responsible consumption, employ efficient and renewable energy use, contribute to the common good, and conform to environmental standards.
Efforts to promote a sustainable use of natural resources are not a waste of money, but rather an investment capable of providing other economic benefits in the medium term. If we look at the larger picture, we can see that more diversified and innovative forms of production which impact less on the environment can prove very profitable. It is a matter of openness to different possibilities which do not involve stifling human creativity and its ideals of progress, but rather directing that energy along new channels.
- Actively encourage companies through corporate dialogues, proxy voting, and support of shareholder resolutions to uphold the highest environmental standards and to change and remediate practices that negatively impact the 63 Pope Francis, Laudato si’, nos. 107,112 64 Pope Francis, Laudato si’, no. 191. environment either in their operations, or those of their contractors or supply chain, and in their products or services.
- Avoid investing in companies that are non-compliant with the three environmental principles of the UN Global Compact