October 11, 2021
Dr. Kent T. Saunders, Professor of Finance and Economics, published an article about biblically responsible investing in the Fall 2021 Christian Business Review.
In this article, Dr. Kent T. Saunders of the Anderson University College of Business introduces the idea of Biblically Responsible Investing (BRI).
Investing in the primary and secondary markets is one of the driving forces of economic growth and human flourishing. When done properly, investing is a light shining, long-term, positive sum game where all interested parties stand to gain. How then is investing done properly? Biblically responsible investing (BRI) has developed into a distinct thematic investment style that enables an investor to explicitly incorporate their faith into their investment decisions. BRI (sometimes known as stewardship investing, morally responsible investing, and faith-based investing) can be thought of as the modern-day application of Scripture to investing.
BRI is making productive use of what has been entrusted to you (e.g., Matthew 25:14-30, Luke 19:11-27) for the glory of God (1 Corinthians 10:31).
Although the Message translation of the Bible titles both the Parable of the Talents and the Parable of the Minas as The Story About Investment, the specific study and practice of BRI is a relatively recent development. BRI can be thought of as an extension of Environmental, Social, and Governance (ESG) investing. ESG investing distinguishes between specific environmental concerns (E), social concerns (S), and governance concerns (G). Environmental concerns and innovations are obviously important to Christians interested in being a steward of the earth. Social concerns are generally related to the relationship between a company and their employees, customers, and suppliers. Social concerns are the ESG area mostly likely to have inconsistencies with BRI. Some inclusive social issues run contrary to some biblical values. Governance issues relate to corporate leadership, internal controls along with malfeasance, and executive pay. BRI is a further evolution of ESG investing that makes a concentrated effort to identify ESG concerns that are inconsistent with biblical values and/or ESG innovations that further God’s Kingdom.
Today, BRI mutual funds and exchange-traded funds are offered through a variety of firms. Eventide Asset Management seeks to “honor God and serve clientsby investing incompanies that create compelling valueforthe global common good.” Guidestone Funds strives to “invest in organizations that seek to protect life, promote human dignity and enhance the efficiency and accessibility of life-sustaining resources.” Inspire Investing endeavors to “invest in the most inspiring, biblically aligned companies in the U.S. applying a faith-based perspective to environmental, social and governance criteria”
No publicly traded company is perfect. As with individuals, all companies fall short (Romans 3:23). However, when one’s faith teaches that an activity is harmful to human flourishing, then a responsible investor should either refrain from owning stock in companies conducting that activity (screen) or actively work with the company via proxy voting and shareowner proposal writing (engage) to change the activity. In both screening and engaging, identifying instances of objectionable activity are necessary.
Not all Christians will agree as to what constitutes an objectionable activity. Differences of opinion and conviction exist with respect to several common objectionable screens. This does not imply that the screening process is hopeless; but rather it does call for awareness of what process is used and oftentimes the establishment of a threshold criteria. A common threshold criteria screen for objectionable activities is to set a maximum percentage of revenue derived from the objectionable activity.
The use of a threshold criteria is a practical approach that many Christians will disagree with. In some sense, the use of threshold criteria is like saying that “a little sin is okay.” This author will not argue that sin is okay but recognizes that sin is a fact of life, and the use of threshold criteria can help identify instances where the overwhelming good a corporation does outweigh relatively smaller concerns which can possibly be reduced through shareholder engagement.
The NIV version of 1 Corinthians 10:31 instructs us “whatever you do, do it all for the glory of God.” Christian investors are called to make productive use of the resources entrusted to us. The act of investing is one way in which someone can be “salt and light” with their monetary resources (Matthew 5:13-16). To conclude, here are some recommended best practices for conducting BRI. Know what you own. Define specific actions and categories of business activity that you deem objectionable. Use BRI screening tools to be aware of issues that may be objectionable (e.g., https://www.inspireinsight.com/#/dashboard). For the objectionable categories, determine threshold criteria for engagement and threshold criteria for avoidance. For possible investments that are free from objectionable activities and possible investments that have below threshold violations and are suitable for engagement, conduct valuation analysis and invest in a diversified set of undervalued or fairly valued biblically responsible investments.
This article is based on a recently published manuscript Biblically Responsible Investing in the (New?) Kingdom Economy.
