If your interest in values-aligned investing is tied to your religious faith, you’re not alone. In one form or another, faith-based investing has been around for centuries and has traditionally involved excluding assets linked to forbidden or disapproved of practices.
Today’s faith-based investors also seek impact, use their shareholder status to advocate for change, can choose from a variety of investment products designed for them, and often find that their goals overlap with those of socially responsible investors. In fact, churches, synagogues, and even Buddhist monks are increasingly turning to ethical and sustainable investments that integrate environmental, social and governance (ESG) issues.
Below are a few starting points and resources for many of the most popular religions in the US:
1. Define it for yourself: Although religious organizations have doctrines and some institutions have investing principles, interpretations vary and your faith is personal. Just like with any socially conscious investing, identifying what matters to you — both financially and spiritually — is the most important part of your faith-based investing journey.
2. Divest or invest by screening assets. As you shape your portfolio to reflect your religious beliefs, you can choose to avoid or include certain companies, sectors or industries. Promising to make the process easier are screening tools, like software provider Zoya Finance’s app or Inspire Insight’s screening website that allows you to enter a company ticker and check its positives, negatives and “biblical values alignment” according to the firm.
Many governing bodies publish guidelines for their own investments or the financial industry that followers can adopt. For example, the US Conference of Catholic Bishops (USCCB) has principles for socially responsible investment, and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), a Bahrain-based non-profit, outlines Islamic-compliant investing.
3. Invest in faith-based funds. You can also invest in a faith-based mutual fund or ETF. As of January 2022, there were 18 religiously responsible ETFs in the US, according to Bloomberg. There are also mutual funds and indexes tied to different religions; most of them screen out companies that are in conflict with religious teachings — adult entertainment, alcohol, tobacco and weapons are commonly excluded businesses. Keep in mind that diversification is sometimes harder with certain industries excluded, and such funds often come with a higher fee. Performance data can show whether they line up with your investment goals and risk tolerance.
4. Seek expert help From Saturna Capital (Islam) to Thrivent (Lutheran), many registered investment advisors (RIAs) specialize in faith-based investing. This is an option worth exploring if you’ve got a lot of assets, especially more complicated ones. Always make sure any prospective adviser whose religious beliefs match yours is also a good fit overall, competent and trustworthy.
5. Make your proxy vote count. Religious groups that are also investors with large endowments often demand businesses adopt sustainable practices via shareholder proposals. You can support them by voting “Yes” during company annual meetings. Every year the Interfaith Center on Corporate Responsibility publishes a Proxy Resolutions and Voting Guide listing the hundreds of proposals filed by its members on issues like climate change, diversity and racial justice, corporate governance, human/worker rights, health, etc. The proxy advisory firm ISS also publishes Catholic Faith-based Proxy voting guidelines every year.
6. Connect with your community. As faith-based investments continue to grow, so do opportunities to learn from other investors. Networks can offer resources and guidance on screening current portfolios and identifying new opportunities.
Some Faith-based Investing Resources:
- Popular screens: pornography, gambling, abortion, stem cells, weapons
- ETF and mutual funds: Global X, Guidestone Funds, Inspire Investing, Timothy Plan, LKCM Aquinas, Ave Maria, Faith Investor Services, Praxis Mutual Funds, New Covenant Funds
- Indexes: S&P Catholic Values, MSCI USA Catholic Values
- Advisories and guidelines: US Conference of Catholic Bishops, Investment Policy Goals for The United Methodist Church, The Episcopal Church Investment Policy Statement, Church of England Statement of Ethical Investment Policy, ZUG Guidelines
- Communities: Catholic Impact Investing Collaborative
- Popular screens: debt, pork products, pornography, alcohol, tobacco
- ETFs and Mutual Funds: SP Funds, Wahed, Saturna Capital, Iman Fund
- Indexes: S&P 500 Shariah, Dow Jones Islamic Market U.S. Index, MSCI USA Islamic Index
- Advisories and Guidelines: Accounting and Auditing Organization for Islamic Financial Institutions, ZUG Guidelines
- Popular screens: climate change, anti-Semitism, human rights, support for Israel
- Mutual Funds and ETFs: Israel-focused funds from VanEck, iShares, ARK
- Advisories and Guidelines: RPB Jewish Values Investing, JCF Guide to Jewish Impact Investing, JLens Jewish Advocacy Strategy, ZUG Guidelines
- Communities: Jewish Women INVEST, Jewish Community Foundation of San Diego
Buddhism and Hinduism