Knights of Columbus Asset Advisors (KoCAA) is out with a paper connecting Catholic beliefs, teachings and values to Mensuram Bonam (MB) and the US Conference of Catholic Bishops Socially Responsible Investment Guidelines (SRIG) as representative Catholic investment guidelines – answering a question: is ESG investing the same as Catholic Social Teaching (CST) investing? Can I as a faith investor substitute ESG for my faith values, in this case, Catholicism?
We’ve written on both Mensuram Bonam and SRIG, and extensively on ESG as a set of values, and as KoCAA notes '…[m]any of the underlying factors for ESG resonate with the aims underlying CST.
'Yet ESG has definite limitations'.
The devil, as is said, is in the details: the KOCCA paper, Investing in the Light of Faith, notes specifically that ESG cannot account for certain 'important dimensions of the Church’s teaching…' for Catholics, including 'sacredness of life' and 'human interconnectedness,' but further it may not account at all for companies who promote products or support movements or activities that directly conflict with CST. Also, companies or asset managers may pursue causes under the S as 'social justice' where what they define as justice can be subjective and contextual, and likewise potentially unaligned with CST.
Another facet of investing not covered by ESG is the 'variety of proactive measures that investors can take to use their investments to effect positive change'. These measures include company management engagement, filing or supporting corporate resolutions, and proxy voting. 'Failure to undertake such active engagement or merely assigning proxies to management is to effectively vote for the status quo with whatever unjust practices or structures it may contain'.
Overall, KoCAA’s theme seems: the details matter – and indicates that ESG is just too broad in some respects and lacking in others to be an unexamined framework for FCI, though we find – as do others – that ESG can be a very useful tool for the pragmatics of implementing FCI.
In the end, quoting from the Parable of Talents 'Since you were faithful in small matters, I will give you great responsibilities'.