The content on this website is intended for investment professionals and institutional asset owners. Individual retail investors should consult with their financial advisers before using any of the content contained on this website. Breckinridge uses cookies to improve user experience. By using our website, you consent to our cookies in accordance with our cookie policy. By clicking “I Agree” and accessing this website, you represent and warrant that you are agreeing to the above statements. In addition, you have read, understood and agree to the terms and conditions of this website. The content on this website is not intended for use or distribution outside of the U.S.

ESG

Perspective published on November 8, 2021

U.S. Catholic Bishops Reviewing Investing Guidelines, Asset Managers Paying Attention

Summary

  • The U.S. Conference of Catholic Bishops (USCCB) is reviewing its sustainable investing guidelines
  • Revisions may include additional context for ESG investing, including fossil fuel-free mandates
  • Asset managers that incorporate USCCB guidelines into strategies will need to take heed of any revisions in their frameworks that accommodate ESG inclusion in a thoughtful way

News that the U.S. Conference of Catholic Bishops (USCCB) is reviewing its sustainable investing guidelines is prompting speculation that revisions may include additional context for environmental social and governance (ESG) investing, including fossil fuel-free mandates.

Reports say that announcement of revisions could come at the bishops’ USCCB Fall General Assembly in Baltimore from November 15 through 17, 2021. Asset managers that incorporate USCCB guidelines into strategies that they manage for clients seeking to invest in accordance with Catholic values will need to take heed of any revisions in their frameworks that accommodate ESG inclusion in a thoughtful way. Breckinridge manages sustainable investment mandates, including strategies that adhere to USCCB Catholic values guidelines and fossil fuel-free methodologies.

Changes to the USCCB sustainable investing guidelines would be the first updates in nearly 20 years and comes after the Vatican issued guidance to Catholics on how to consider environmental matters in investments, including fossil fuel stocks.

In a September 28, 2021 editorial, National Catholic Reporter stated, “These actions are in line with the increasingly clear guidance coming from the Vatican, beginning with Pope Francis' 2015 encyclical ‘Laudato Si', on Care for Our Common Home,’ followed by the Synod of Bishops for the Amazon in October 2019 and, in June 2020, by proposals for implementing Laudato Si', with recommendations on investments.”

The potential for more explicit integration of ESG principles, including fossil fuel-free strategies, in Catholic values investing approaches comes as institutions broadly are seeking to eliminate oil and gas investments from their portfolios.

“A growing number of college and university endowments are divesting from fossil-fuel holdings and embracing ESG principles, Pensions & Investments reported on November 1, 2021. “The largest among them is Harvard University, which announced earlier this year that its $53.2 billion endowment would make no direct investments in fossil-fuel companies going forward.”

Other institutions to divest of fossil fuel investments during the last two years, according to Pensions & Investments, include Boston University, Cornell University, Dartmouth College, the University of California, Oakland, and Loyola University Chicago.

Global attention on the topic of climate change and the investment risks that it poses increased in 2021 after the report of the UN Intergovernmental Panel on Climate Change on the causes and current extent of climate change, In addition, the COP26 global climate change conference in Glasgow heightened climate change concerns.

National Catholic Reporter’s EarthBeat project noted that Scotland's Catholic Church announced its financial divestment from fossil fuels recently. “The Catholic Bishops' Conference of Scotland, along with all eight Scottish archdioceses and dioceses, announced their fossil-free commitment Oct. 26, just days before the United Nations climate conference known as COP26 will begin in Glasgow.” EarthBeat said.

 

DISCLAIMER: The opinions and views expressed are those of Breckinridge Capital Advisors, Inc. They are current as of the date(s) indicated but are subject to change without notice. Any estimates, targets, and projections are based on Breckinridge research, analysis, and assumptions. No assurances can be made that any such estimate, target or projection will be accurate; actual results may differ substantially.

There are risks associated with fixed income investments, including credit risk, interest rate risk, default risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities. Past performance is not a guarantee of future results.

Nothing contained herein should be construed or relied upon as financial, legal or tax advice. All investments involve risks, including the loss of principal. Investors should consult with their financial professional before making any investment decisions.

While Breckinridge believes the assessment of ESG criteria can improve overall credit risk analysis, there is no guarantee that integrating ESG analysis will provide improved risk-adjusted returns over any specific time period.

Some information has been taken directly from unaffiliated third-party sources. Breckinridge believes such information is reliable but does not guarantee its accuracy or completeness.

Any specific securities mentioned are for illustrative and example only. They do not necessarily represent actual investments in any client portfolio.

BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). BARCLAYS® is a trademark and service mark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Bloomberg or Bloomberg’s licensors, including Barclays, own all proprietary rights in the Bloomberg Barclays Indices.

Neither Bloomberg nor Barclays approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.