What Pope Francis’ teaches about capitalism, “the free market” and “market ideology” in his en-cyclical “Laudato Si'” is grounded in fundamental biblical insights, consistent with basic ethical principles and in harmony with long-standing and core elements of Catholic Social Teaching.
Those pretending to be shocked by his views would do well to take another look at those founda-tions as they authentically reflect on his teaching and consider its implications.
The encyclical offers a number guiding principles about the role and responsibility of businesses of all sizes including the responsibilities of the shareowners and managers of corporations.
Broadly speaking, Pope Francis presents a very balanced view of the responsibility of corpora-tions while also differentiating between small- and medium-sized companies and large global and multinational corporations. He especially highlights the significance of those responsibilities relat-ed to issues of meaningful employment, the marginalized and people living in poverty, the just use of natural resources, the impacts of climate change, and food and water sustainability for our planet’s growing population.
Both explicitly and implicitly in the articulation of these different responsibilities the roles and re-sponsibilities of shareholders are elaborated. In accepting these responsibilities and becoming both socially responsible investors and shareholder advocates, investors small and large have a unique opportunity to participate in the creation of more socially and environmentally conscious corporations that can help find and fund solutions to the many challenges confronting the human family.
A basic enumeration of the guiding principles that faith-based and responsible shareholders might consider includes the following:
1. With stock ownership come both rights and responsibilities;
2. Averting one’s eyes or attention from the illegal, immoral and unethical activities on the part of the corporations that you are invested in does not diminish your responsibility as an owner
3. The responsibility that ownership entails is not alienated unless it is formally transferred to someone else;
4. Socializing risk and privatizing profits in any financial or commercial transaction or activity is inconsistent with the protection and promotion of the common good;
5. Hiring professional consultants or asset managers to manage your money does not imply re-linquishment of your ethical and moral responsibility.
There are numerous institutions and organizations established for the purpose of helping faith-based investors exercise their stock ownership responsibly. The Interfaith Center on Corporate Responsibility, in existence since 1971, and of which I am honored to be board chair, is one. The practitioners of shareholder advocacy in these organizations have the knowledge, experience and skill to guide both individuals and institutions who want to become more active, participatory and engaged owners. There continues to be an increasing abundance of data, performance records and academic research available for those interested in exercising their responsibilities as own-ers.
Faith leaders, including Catholic bishops and leaders of Catholic institutions and organizations have an excellent opportunity to align their money and their mission more closely by integrating this approach in their own investment policies and practices. Faith consistent and socially re-sponsible investing has three basic components that can be adjusted according to the investment profile and appetite of the institution. It consists of a process that: excludes or “screens” sectors or companies that are deemed objectionable or immoral; engages companies in your portfolio to encourage improved practices or activities, and; proactively invests in funds or companies pro-ducing positive social and environmental impacts and that are developing the needed solutions to our world’s challenges.
For too long too many religious leaders and institutions have allowed themselves to be held cap-tive by the prevailing practices used by a mainstream investment community that focuses on pro-ducing positive short-term returns with little regard for the potential environmental and social damages. The Holy Father calls us to re-examine those approaches by adopting an investing process that recalls our commitment to serve communities and gives priority to people and plan-et.
While there are those who would wish us to believe otherwise, Pope Francis is not suggesting we completely dismantle an economic system that has been successful in harnessing the creativity, productivity and commercial initiatives of billions of people and institutions. However, he is sug-gesting that all people of faith re-examine their current participation in the system and use their influence to refocus and redirect it to include the social and ecological priorities that it relies on in each and every transaction that contribute to its functioning.
In the parlance of the faith consistent and socially responsible investment community we refer to this as aligning money with mission and it is especially incumbent on our world’s faith leaders to ensure that, through their investment practices, they are leading by example.