Bridging a Great Divide: The Evolving Evangelical Relationship with SRI
This article first appeared in the Green Money Journal
When the term Biblically Responsible Investing is uttered, a common perception forms in the minds of many investors about a politically conservative, narrowly focused approach to investing that targets a couple of socially charged issues. Sustainable investors often perceive a great divide between socially responsible investing and biblically responsible investing. Those perceptions fail to see the change underway in the BRI space, including with those that would consider themselves evangelical. BRI is experiencing a growth towards a holistic view of investing and faith, bringing into focus the ideas of positive screening and equity selection, shareholder advocacy, and targeted investments in communities– and not just the use negative screening. It focuses on excellence in how advisers and investment managers work, not condemning others. It is an effort to avoid the risk of those in the field becoming what author Larry Osborne describes as “Accidental Pharisees” in his book of the same name. This movement in biblically responsible investing, along with generational attitudinal trends, creates opportunities for those embracing these trends, and for those in the socially responsible investing field. Common goals can be accomplished by focusing on shared perspectives that remain a minority viewpoint on Wall Street. There is an opportunity of bridging a great divide.
History of Values Investing
It should not come as a surprise that the similarities between SRI and BRI are much greater than the differences. The concept of utilizing personal values in the decision making process for investing has existed for much longer than the current movements and the various terms that have been coined to formalize the process. Since personal values are usually developed based on a person’s faith, the integration of faith with investing is intertwined in our society whether we formalize it in our decision making process or not. The idea of Christian faith impacting wealth and the use of wealth goes back to the beginning of Christianity.
More practically, faith based investing began as a formalized practice over 200 years ago when used by the Quakers and Methodists. The first use of what we could call Biblically Responsible Investing was to restrict investing that supported human trafficking, which at the time was the legal slave trade. Methodist founder John Wesley is also credited with raising awareness and building credibility for socially responsible investing, most prominently in a sermon entitled “The Use of Money”. In it, he outlined some of the ideas that remain the basis for both Socially Responsible Investing and Biblically Responsible Investing. At that time, the focus was on excluding businesses with practices would harm others, and the avoidance of industries that were considered detrimental to society.
Over time the concept of social justice became part of the fabric of faith based investing, socially responsible investing became a more accepted term, and the movement began to shift away from the religious origins and toward a more secularized foundation, though this approach continues to retain many of the concepts that Christians and other people of faith would still support.
Over the last 20 years, a new variation of faith based investing has grown from an evangelical base. In part, this stemmed from the trend of SRI towards a less religious orientation, but it was also an example of meeting a market need. Some Evangelical Christians did not feel they had adequate investment options available through SRI, particularly with respect to some social screens that were viewed as a priority. In some cases, the very social perspectives that evangelical Christians sought to sought to reflect in their investments directly contradicted those that were priorities for many socially responsible investing approaches. These differences—though far fewer than many might expect—have formed a perceived “great divide” between BRI and SRI philosophies and proponents as values-driven investment options have exploded in number over the past decade.
Defining Faith Based Investing
The definition of Biblically Responsible Investing (BRI) used and promoted by the Christian Investment Forum (CIF) remains purposefully broad. While there are some examples of the term BRI being narrowly used for only a specific set of criteria for investing, the use of the term BRI by the Christian Investment Forum is broad and is interchangeable with other similar terms used by investors who incorporate Christian faith into the investing process. Those include Faith Integrated Investing, Morally Responsible Investing, Stewardship Investing, or Values Based Investing.
In this broader scope, Biblically Responsible Investing is a term used to describe an approach to investing assets in a way that is in alignment with the investor’s faith and biblical beliefs. The definition that CIF uses is as follows:
“Biblically Responsible Investing, or BRI, applies Christian values to investment decision making by incorporating moral and social principles into traditional financial analysis. BRI provides a platform for the faithful stewardship of God’s gifts on the basis of our shared Christian faith. BRI seeks to invest in and own companies that best represent those Christian values.” (Editor Note: this has been updated since original publication)
By defining BRI as an approach that seeks to align investments with the investor’s faith and biblical beliefs, BRI is by definition a personal process. While Christians share core foundational beliefs, it is also true that on many topics personal faith perspectives will lead Christians to differing opinions and, more importantly, differing priorities. This makes it difficult to place a simple label or definition on what BRI is and what it is not, or how it is applied into the investment decision making process. This diversity in how investors apply BRI is similar to what practitioners of SRI struggle with in defining their approach to investing.
The similarities between Faith Based Investing and Sustainable Investing are much greater than the differences. Both seek to incorporate additional factors into investment decisions beyond a purely quantitative financial assessment. Some on both sides believe this can provide superior performance, while others on both sides believe it is appropriate to address issues they believe are important in society regardless of the performance issue. The similarity becomes even more apparent if we use the description of SRI from USSIF: the Forum for Sustainable and Responsible Investing but add one single key phrase (italicized bold to highlight).
“What unites these diverse investment approaches – and what ultimately distinguishes them from the broader universe of assets under management in the United States – is the explicit incorporation of environmental, community, societal or governance issues viewed from the Christian faith into investment decision-making, fund management or shareholder engagement activities. The specific ESG factors and the way they are used may differ widely from investor to investor, and tactical and technical considerations are often specific to an institution or fund manager. ”
It is reasonable to say that Faith Based Investing largely mirrors Sustainable Investing, except that the lens used to consider criteria such as environmental, social, corporate governance, and company industries is a lens of religious faith and the values that flow from that faith. That lens is key in understanding the purpose for which the investment is made, and in determining which values play a role in guiding investment selection.
An Evolving Professional Investment Process
Faith Based Investing and BRI has continued to evolve over the last 20 years, as more practitioners have formed firms and more investment options have become available. Most notable is the breadth of approaches to BRI. Each firm and fund manager develops an investing strategy that aligns with their faith and values, but that is also based on the core principles of professional investment management. Social issues that have become polarizing do remain a part of the criteria for some, but just as many funds also prioritize shareholder governance issues, inclusionary screening, or best-in-class selection parameters. Some examples: Praxis Mutual Funds, from the Mennonite Church, is an active participant in Green Bonds through the Praxis Intermediate Income Fund (MIIAX) , and a vocal advocate for the environmentally-focused faith value of “Creation Care”. Epiphany Funds comes from a Catholic perspective. Epiphany offers some specialty funds, such as a Latin America Fund, and takes an active role reviewing proxy materials internally and voting based on their faith values. Eventide Funds doesn’t fall under one particular denominational label, but instead blends evangelical and mainline faith values. Eventide has developed a concept known as Business360, which uses many of the themes familiar with socially responsible investing and re-aligns it with the positive religious convictions that were a foundation of SRI. Business360 is a framework that uses inclusionary screens, exclusionary screens, as well as other governance data points to value a company on more than the short-term bottom line profits.
15 years ago there were no more than 5 mutual funds that described themselves as BRI focused. Today, there are at least 100 different mutual funds across 28 different categories that explicitly incorporate Christian faith values as one part of their investment process. The performance of these funds, based on ratings from firms such as Morningstar, follow a similar distribution curve as the full universe of investment options, and closely align with the performance of Sustainable Investing funds. With the number of funds and fund managers across sectors, there are also investment management firms (Aris Corporation & Camelot Portfolios, for example) that research and create diversified portfolios of BRI funds for clients through separately-managed accounts.
Becoming Friends in Mission
The reality in the financial industry is that the common goals of both BRI and SRI remain a minority view on Wall Street, as well as with many institutional investors and advisors. One of the common goals of both approaches is to establish the credibility of incorporating ESG factors into stock selection and outperformance, whether those factors are included based on faith values or secular social ideals.
For an agnostic investor, investing in GuideStone Extended-Duration Bond Fund (GEDZX), Eventide Healthcare & Life Sciences Fund (ETNHX), or other BRI funds can be just as impactful to their social goals as any other SRI fund, and deliver outstanding financial performance in the process.
For an evangelical investor, investing in funds such as Calvert Global Alternative Energy Fund (CGAEX) or Pax EllevateGlobal Women’s Index Fund (PXWIX), among others, can diversify a portfolio while not necessarily violating their own faith convictions.
In his book, Uncommon Decency, Richard Mouw describes what is needed if we are to focus on common goals between SRI and BRI. He writes, “…one of the real problems in modern life is that the people who are good at being civil often lack strong convictions and people who have strong convictions often lack civility….We need to find a way of combining a civil outlook with a ‘passionate intensity’ about our convictions. The real challenge is to come up with a convicted civility.” Through convicted civility perhaps we can remain friends in mission.
CONCLUSION
There increasingly is no great divide between BRI and SRI. There are differences, to be sure, in some values, convictions and priorities. The reasons for investment decisions may be different. The real divide, however, is with those that don’t take any values or convictions into account when investing and instead seek only to maximize value regardless of the harm that may be caused. Not only is that short-sighted, but research is finally proving that maxim is faulty as well.