USCCB Updates Investment Guidelines

Catholic Investors Take Note of New Exclusions and Important Clarifications

In the mid-1980s, the USCCB issued socially responsible investment guidelines and provided insight into how Catholics should invest their money. In late 2021 the US Bishops issued the newest update to the guidelines.

The new guidelines are similar to the prior version with several clarifications and newly excluded business categories in an overall much clearer presentation.

We are happy to see our Bishops staying on top of something so important. Business, technology and the world in general have changed considerably since the original guidelines were published. These updates take the same principles behind the earlier guidelines and apply them to the new realities facing society today.

New Exclusions Added to the USCCB Investment Guidelines

Human Cloning Explicitly Forbidden by Bishops

It wasn’t until 1996, roughly a decade after the original USCCB Guidelines were published, that Dolly the Sheep was cloned. Thus, it’s very understandable why the first set of guidelines seemingly overlooked such an obviously hot button issue.

Now, the United States Conference of Catholic Bishops has officially banned investment in companies that engage in the furtherance of human cloning.

Even before this change, our portfolios were already screening out these types of companies. So, there is no appreciable change for our current clients now that the law has caught up to reality.

Gambling and Other, Specific Addictive Materials Are Now Excluded

Up until the update was published, the USCCB had not officially excluded tobacco or gambling. Legalized cannabis, like cloning, is such a relatively new phenomenon that it should not be a surprise there was no formal position on it.

Catholic investors are now forbidden to invest in companies involved in the production of tobacco and/or recreational cannabis and those whose primary function is profiting from gambling.

A very important thing to note is that while the USCCB has banned investing in companies that exist primarily to make money from gambling, they expressly state “games of chance or wagers are not of themselves contrary to justice.” So, while this does mean investors shouldn’t be supporting casinos and similar businesses, it does not equate to a ban on playing poker or other personal gambling activities.

Tobacco and cannabis producers as well as businesses in the gambling industry are all filtered out of our portfolios. Much like with cloning, though, we were already filtering out tobacco and cannabis before it became mandatory, so our clients shouldn’t notice much of a change caused by the update.

Companies Engaged in Gender Reassignment and Hormone Therapy Must be Avoided

Transgenderism is essentially a modern attempt to live out ancient Gnostic heresies. The biggest difference is mainly that science and technology now allow a fuller attempt at disassociating the “self” from the body. Given its antipathy to the Church’s consistent teaching about the dignity of the human person, it’s no surprise that companies actively involved in transgendering are now excluded. Providers of gender re-assignment surgery and hormone therapies cannot be invested in by faithful Catholics.

What makes this exclusion difficult to put into practice is that while certain procedures and therapies have existed for a relatively long time, their use in gender re-assignment is new.

For example, mastectomies can be performed to remove cancerous parts of the body or as part of an elaborate attempt to look like a man. Similarly, puberty blockers are an ethically valid way to treat children with precocious puberty, though they can also be used to promote transgenderism.

These issues make singling out excluded companies uniquely difficult. We are actively working towards fine-tuning our screening process to ensure we can accurately screen out bad actors without eliminating legitimate businesses.

The Most Diverse Exclusions: Media and Biodiversity

The USCCB guidelines also include avoiding “media corporations that have demonstrated resistance to adopting and implementing a human rights policy that is consistent to Church teaching” and “companies that have caused specific instances of biodiversity loss, or whose practices have significantly contributed to biodiversity loss and have not worked toward correcting or remediating the damage their operations have caused.”

Exactly what the criteria are for determining if a company is in violation of either of the above is left unclear. When more information is made available by the USCCB, we will adjust our screens accordingly.

Existing Exclusions Received Important Clarifications

Besides additional exclusions, the USCCB’s new guidelines include a few clarifications on previously excluded businesses. Specifically, contraceptives and weapons manufacturers face additional criteria for exclusion.

Contraceptive Exclusion Now Specifically Includes Sellers

The USCCB guidelines have always called for the exclusion of contraceptive manufacturers. This, obviously, meant that only pharmaceutical companies were affected by the guidelines. An odd result of this is that while Catholic investors were forbidden to invest in the businesses making contraceptives, they were technically free to buy shares of companies selling contraceptives.

In their update to the investment guidelines, the Bishops now explicitly forbid investing in companies that make at least 10% of their revenue from the sale of contraceptives.

This new prohibition on companies that sell contraceptives also applies to businesses that sell but do not manufacture them. An obvious example of the type of enterprise that would run afoul of this rule is a pharmacy that does brisk business selling contraceptives. Fortunately, businesses deriving such a high percent of revenue from contraceptives are very few in number and we are actively screening for them.

Weapons Manufacturers Now Include Many Small Arms

Limiting investment in arms production is nothing new to the USCCB Guidelines. The earlier iteration included a prohibition on the manufacturers of nuclear, biological and chemical weapons as well as a few other types of heavy weapons.

The new guidelines now additionally call for a moratorium on investment in companies that make small arms for uses other than hunting, police work or the military.

While this is an important change to the guidelines, it’s a step we had already taken with our screens. Clients should not notice a difference in performance based on this specific clarification.

Additions and Updates but No Removals

Summing up the revised guidelines, the Bishops clarified a few things and added a few new exclusion categories but did not remove any existing prohibitions nor the requirement to do good in addition to avoiding evil. In brief, the update

Added

• Human Cloning
• Addictive Materials
• Transgender Services
• Bio-Diversity Reduction
• Media Inconsistent with Church Teaching

Updated

• Contraceptives include sellers making more than 10% of their revenue from them
• Weapons Production includes small arms that aren’t for use by hunters, the police or military

Kept

• All previous exclusions
• Corporate advocacy requirements – working with companies to get them to change objectionable policies and business practices

As we stated before, we are happy to see this update. A lot has changed since the original guidelines were promulgated and knowing that the Bishops are staying on top of the situation is wonderful. As always, we will keep our screens up to date with the USCCB Guidelines and continue advocating for the good.

Post from: Insights