CEP is honored to partner with Cornerstone Management for investment management of our Charitable Gift Annuity and Charitable Trust assets. Additionally, Cornerstone Management serves as our Investment Advisor for all Endowment Funds managed by CEP. In this article, Winters Richwine, COO at Cornerstone, discusses Biblically Responsible Investing.
What is Biblically Responsible Investing (BRI)?
by Winters Richwine, CFA, CPA
Principal and Chief Operating Officer at Cornerstone Management
Introduction
Biblically Responsible Investing (BRI), a type of faith-based investing, is gaining ground with both institutional and retail Christian investors. Now more than ever, financial capital is being used as a tool to influence the decisions companies make. The purpose of this article is to explain what Biblically Responsible Investing is and to articulate why it should matter to Christian nonprofit organizations.
Background
While investors have likely aligned their investments with their beliefs throughout time, John Wesley (the founder of the Methodist Church) established the roots of what we call Biblically Responsible Investing today. Wesley’s 1759 sermon “The Use of Money” instructed people to not earn money through activities that harm others.
In 1928, the Pioneer Fund was founded with Christian-compatible restrictions on “sin stocks.”[1] (Note: the fund does not maintain a Christian focus today.) Biblically Responsible Investing funds became more publicly available in the 1990s and 2000s. Today, the volume of Christian public and private investment options continues to grow.
At a high level, Biblically Responsible Investing allows investors to avoid “great revenues with injustice” (Proverbs 16:8 ESV). The focus has historically been on excluding investments connected to activities such as alcohol, tobacco, gambling, pornography, and abortion. This approach – called avoidance or negative screening – is still the most commonly found today.
There is also a mirror approach to avoidance. This avenue is investing in redemptive activities. Companies that offer fair labor practices, exercise stewardship of the environment, and/or pursue justice fit the redemptive angle. This approach to Biblically Responsible Investing has historically existed mostly in private markets but is becoming more common in public company investments as well.
Finally, Biblically Responsible Investing can go beyond what is currently there and advocate for what should be. One of the earlier recorded advocacy initiatives took place in 1970, when the Episcopal Church founded the Council on Corporate Social Responsibility (CCSR). The CCSR urged General Motors to withdraw from apartheid South Africa.[2] The CCSR still exists today and has expanded its scope. Asset management firms are increasingly using the advocacy tool.
Biblically Responsible Investing and Socially Responsible Investing
Socially Responsible Investing (SRI) has been consistently growing and seems to have recently hit an inflection point of more rapid expansion. Socially Responsible Investing and one of its subsets in particular, Environmental, Social, and Governance (ESG), are now generally known terms within the investment world.
SRI is an umbrella term that covers many different philosophies. There are variations and in some cases even true divergences among these initiatives. For example, take the ESG movement. Many Christians may believe it is important to protect the environment – the term “Creation Care” is used within the Christian faith. The prospect of good governance – transparency, proper checks and balances, aligning interests among stakeholders – also seem appealing. However, there is often divergence on the social front. ESG (and SRI in general) is typically more progressive, while Biblically Responsible Investing often takes a more conservative position on social issues. The takeaway here is that ESG or many other SRI approaches should not be mistaken for Biblically Responsible Investing.
Biblically Responsible Investing Matters Today as Much as Ever
Asset management firms are increasingly using ESG considerations when deciding in which companies to invest within the firms’ active strategies. However, passive index fund providers are likely creating an even larger impact in driving corporate principles. When combined, the three largest index fund firms represent the largest shareholder in nearly nine-tenths of S&P 500 companies.[3] It is obvious that these firms are able to initiate and swing shareholder votes. Just as powerful is the direct influence the index fund providers have with company management and boards.
These asset management firms are not necessarily pursuing an anti-Christian agenda. But the clearest path to ensuring that financial capital is being used to advocate for Christian causes is through Biblically Responsible Investing products. Biblically Responsible Investing provides a means through which Christian organizations can use their capital for positive influence and therefore fulfill stewardship responsibilities.
How to Participate in Biblically Responsible Investing
Following a discussion of what is Biblically Responsible Investing, a natural next question is how to incorporate it into investment portfolios. The good news is that Biblically Responsible Investing can be accessed by investors large and small.
Products like mutual funds and exchange-traded funds (ETFs) can be purchased in standard brokerage accounts. There are a handful of Christian asset management firms offering these funds.
This explanation of Biblically Responsible Investing is intended to provide a high-level overview of the BRI space, its trends, and its importance. The heart of Biblically Responsible Investing is to honor God with one’s financial resources.
Editor’s Note
Church Extension Plan includes a variety of Biblically Responsible Investments as options within the 403(b) offering. The majority of the BRI offerings are Collective Investment Trust (CIT) funds managed by Harvest Investment Services with additional offerings from Inspire Investing. The funds avoid investing in companies that take a stance antithetical to Biblical standards. The full list of investment options within the CEP 403(b) plan is available at https://www.cepnet.com/retirement/403b/investment-options/ .
[1] https://www.amundi.com/usinvestors/About-Us/Responsible-Investing
[3] Lowrey, Annie, “Could Index Funds Be ‘Worse Than Marxism’?” The Atlantic, April 2021Cornerstone Management
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Cornerstone Management, Inc. is an SEC registered investment advisory firm. The information in this article is not intended to be, nor should it be construed as, an offer to sell or purchase securities. Cornerstone Management, Inc. may only transact business in the states where registered. This information is provided for the intended use of persons who reside in the United States. This information is provided for general informational purposes and is believed to be factual and reliable.