- The United States Conference of Catholic Bishops approved updated investing guidelines.
- The updates integrate important ESG principles.
- Key topics addressed in the updates include fossil fuels and engagement with security issuers.
The United States Conference of Catholic Bishops (USCCB) approved updated guidelines governing financial investment that, for the first time, integrate explicit environmental, social and governance (ESG) principles, including fossil fuels. The USCCB’s Fall Assembly adopted the Socially Responsible Investment Guidelines updates, the first in nearly 20 years, on November 17, 2021.
According to reports, “The policy adds guidance in areas such as telecommunications, media and social impact investing, and expands consideration of steps ranging from no investment to engaging corporations on their business practices.”1
Breckinridge followed developments at the Fall Assembly closely because its Catholic Values fixed income strategies selectively invest in bonds that strive to meet the USCCB Socially Responsible Investment Guidelines and leverage the firm’s decade of experience integrating ESG research into the investment process.
Bishop David Malloy of Rockford, Illinois, chairman of the conference's Committee on International Justice and Peace, told the assembly, "This update maintains and builds upon those aspects of the [existing] guidelines that users deemed to be the most useful," Catholic News Service reported.1 The USCCB group worked on the investment guideline updates with two ESG research providers, per reports.
Fossil fuels gain added attention
The USCCB document calls for promoting "responsible investments in social and environmental sectors, for example by evaluating progressive disinvestment from the fossil-fuel sector." Bishop McElroy said, "I think we're going to have to move to an absolute prohibition on fossil fuels if we're going to give witness to where the world needs to move.” Comments at the Fall Assembly relative to fossil fuels-free investing track consistently with Breckinridge’s experience applying fossil fuel screens to strategies, including the Breckinridge Catholic Values Customization.
In addition to highlighting three corporate strategies to follow: avoid doing harm, actively work for change and promote the common good, the USCCB guidelines advance investment policies that cover five categories: “protecting human life, promoting human dignity, enhancing the common good, pursuing economic justice and saving our global common home.”
ESG principles integrated throughout updates
Engagement with security issuers is an essential element of ESG investing approaches and features prominently in the updated guidelines as it addresses principle ESG considerations. Breckinridge conducts extensive issuer engagement annually. The firm published the 2021 issuer engagement report titled Addressing the Materiality of Climate Change Risk through Issuer Engagement in September. It focuses on discussions with bond issuers and investment and climate change specialists on climate risk mitigation and adaptation with the goal of improving resilience.
The USCCB updates note that the U.S. bishops' conference "will seek opportunities to collaborate with other investors to invest in corporations, organizations and other financial initiatives that not only aim at financial return but also actively intend to address the common good, generating positive and environmental change."
“The draft policy calls for engagement, rather than not investing, with companies regarding climate change, reducing greenhouse gas emissions, environmental protection, water depletion, human rights, racial and social discrimination, human trafficking, hate speech in social media, discrimination or infringement on religious freedom, privacy and civil liberties,” reports from the Assembly noted.
The document also seeks to maintain investments to allow for efforts to encourage companies to improve labor standards, encourage social, environmental and financial responsibility, adopt ethical and responsible banking, and support affordable housing initiatives.
In addition to the Catholic Values customization, Breckinridge also offers fossil fuel-free investing and other values-aligned investment strategies. More on these portfolio customizations is available here.
 “Bishops approve new socially responsible investment guidelines,” Catholic News Service, November 17, 2021.
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