New Vatican Document on Markets and Ethics

While CEOs may have nervously read Larry Finke’s letter, they may find greater guidance in their task reading a new Vatican document, Oeconomicae et pecuniariae quaestiones (Considerations for an Ethical Discernment Regarding Some Aspects of the Present Economic-Financial System). The new document, approved by Pope Francis, running to just over 11,000 words, brings Vatican heft to financial instruments including shareholder risk, subprime mortgages, derivatives, credit default swaps, interbank loans (LIBOR), shadow banking systems (think, cryptocurrency), and offshore tax havens.

While some may consider Pope Francis an outlier, the 49 footnotes, grounded in traditional Catholic teaching, illustrate the continuity of St. John Paul II, Pope Benedict, and Pope Francis on papal teaching related to the economy. The document aims to apply those principles to the current context. The document posits:

No profit is in fact legitimate when it falls short of the objective of the integral promotion of the human person, the universal destination of goods, and the preferential option for the poor. (#10)

In other words, profit in the marketplace, in and of itself, is not enough.

Another paragraph reflects the concerns that we raise in our resolutions regardinging executive compensation with the pharmaceutical companies:

In addition, such logic has often pushed managements to establish economic policies aimed not at increasing the economic health of the companies that they serve, but at the mere profits of the shareholders, damaging therefore the legitimate interests of those who are bearing all of the work and service benefiting the same company, as well as the consumers and the various local communities (stakeholders). This is often incentivized by substantial remuneration in proportion to immediate results of management, but not likewise counterbalanced by equivalent penalization, in the case of failure of the objectives, though assuring greater profits to managers and shareholders in a short period, and thus ending up with forcing excessive risk, leaving the companies weak and impoverished of those economic energies that would have assured them adequate expectations for the future. (#23)

Not only does it speak to management and shareholders, the document offers some challenges to consumers as well:

It becomes therefore quite evident how important a critical and responsible exercise of consumption and savings actually is. Shopping, for example, a daily engagement with which we procure the necessities of
living, is also a form of a choice that we exercise among the various products that the market offers. It is a
choice through which we often opt, in an unconscious way, for goods, whose production possibly takes place through supply chains in which the violation of the most elementary human rights is normal or, thanks to the work of the companies, whose ethics in fact do not know any interest other than that of profit of their shareholders at any cost.

It is necessary to train ourselves to make the choice for those goods on whose shoulders lies a journey
worthy from the ethical point of view, because also through the gesture, apparently banal, of consumption, we actually express an ethics and are called to take a stand in front of what is good or bad for the actual human person. Someone spoke of the proposal to “vote with your wallet”. This is in reference to voting daily in the markets in favor of whatever helps the concrete well-being of all of us, and rejecting whatever harms it. (#33)

For those of us who engage in socially responsible investing, the document concludes with some significant encouragement:

In front of the massiveness and pervasiveness of today’s economic-financial systems, we could be tempted to abandon ourselves to cynicism, and to think that with our poor forces we can do very little. In
reality, every one of us can do so much, especially if one does not remain alone.

Numerous associations emerging from civil society represent in this sense a reservoir of consciousness, and social responsibility, of which we cannot do without. Today as never before we are all called, as sentinels, to watch over genuine life and to make ourselves catalysts of a new social behavior, shaping our actions to the search for the common good, and establishing it on the sound principles of solidarity and subsidiarity. (#34)

The most evocative phrase for me from the document is here, that “we are called, as sentinels.” Frank Sherman, when describing our work in corporate social responsibility, likes to say that we are “canaries in the coal mine.” While more and more people are taking up the work of fighting human trafficking, we would be nowhere were it not for the work of so many dedicated religious sisters who have kept a laser-like focus on the issue. Time and again, faith-based socially responsible investors take up a concern, “as sentinels,” long before others take notice. For 45 years, SGI has been a pioneer in socially responsible investing, and we can draw strength from this document that our work is critical for achieving a more just and sustainable economy.

The full text of the document can be found here in a PDF or on the Vatican website here.

Helpful commentary on the new document can be found here:

Less helpful but interesting commentary:

FSPA takes CSR to court

When we saw a recent article (Wisconsin groups to get $12M settlement for natural gas price fixing) from the La Crosse Tribune quoting Sr. Sue Ernster, FSPA, we wanted to bring it to the attention of our SGI members.  Sr. Sue adds:

FSPA participated in the lawsuit of the manipulation of natural gas pricing by multiple utilities as another way of how we live out our social justice activities and our values.  We see this as an effort to help those whose voices are not represented in this and other situations.  We are utilizing the resources we have at our disposal to hold those accountable who were responsible for this price manipulation.

Our hope is that participating in litigation settlements such as these, as well as filing shareholder resolutions with companies, demonstrates that people are paying attention, asking questions and holding them accountable for their actions.

The Guardian profiles Sr. Nora Nash

The Guardian, heralded for its independent and investigative journalism, ran a feature story on Sr. Nora Nash, O.S.F.: Sister act: how a Philadelphia nun faced up to Wall Street. Sr. Nora, a member of the Sisters of St. Francis of Philadelphia, engages in the work of corporate social responsibility through Philadelphia Area Coalition for Responsible Investment (PACRI) and ICCR.

The Guardian’s article is excellent in its outline of why and how a religious community engages in CSR work and offers considerable detail about the breadth of issues that Sr. Nora and her colleagues take on as well as significant detail about the shape of those efforts with Wells Fargo and Kroger. The Guardian interviewed not only Sr. Nora’s colleagues in CSR work but also got Kroger’s communication chief to speak about the experience of working with faith-based investors.

Please, visit the article. Perhaps you may even share it with others who may wish to learn more about socially responsible investment. Again, the article is found here: https://www.theguardian.com/us-news/2017/dec/17/philadelphia-nuns-capitalism-activism

The New York TImes examines low-carbon investments

Last week, The New York Times published an article, Funds That Can Put Your Investments on a Low-Carbon Diet, that examines low-carbon investments. Like SGI in our resource page, the article highlights Fossil Free Funds, a resource from As You Sow. The article highlights some of the investment funds that provide low-carbon alternatives. It also includes a general assessment from an industry leader, Jon F. Hale of Morningstar, on the risks and performance of these funds.

As the NYT is behind a paywall after ten monthly free articles, here is a PDF version of the article without the photos or links: Funds That Can Put Your Investments on a Low-Carbon Diet – The New York Times.

Ring the bells that can be rung

The Board of the ​Seventh Generation ​Interfaith CRI gathered at my mother house, the Franciscan Sisters of Perpetual Adoration, in La Crosse, Wisconsin last month to reflect on both the challenges and opportunities we face and to map a path forward. The day was facilitated by Marlene Weisenbeck, FSPA, ​with presentations ​by Frank Sherman, Executive Director of Seventh Generation Interfaith, and Seventh Generation Interfatih Board members Peg Groth ​and ​Mark Peters.

Sister Marlene’s opening reflection on the loss of our founder, Fr. Mike Crosby, O.F.M. Cap. was both moving and a spur to “ring the bells that can still be rung,” as Leonard Cohen urged us in his song Anthem. We spent time in breakout groups discussing the external and internal ​trends impacting our mission and vision. We agreed on a SWOT analysis (strengths, weakness, opportunity and threats), a vision of what success would look like, measurable goals and objectives to get us there, and an understanding of who would be responsible for achieving them. After this discussion, we discerned what would be a possible organizational model and funding strategy to facilitate it.

I found the workshop to be both challenging and energizing. Fr. Mike Crosby left us a 45-year legacy of shareholder engagement. Despite the headwinds of a challenging political environment and the changing demographics of our members, the group came away feeling that this ministry has been a catalyst for change and compelled to continue in Mike’s footsteps to bring good news to the poor and God’s creation. I look forward to working in coalition with other SGI members to ring the bells that can be rung.

Sr. Sue Ernster, F.S.P.A

SGI board plans for the future in strategic renewal workshop

By Sue Ernster, FSPA

On September 21, 2017, ​the Board of the ​Seventh Generation ​Interfaith CRI met in La Crosse, WI to engage in strategic planning for the future as well as acknowledging the changing path of ​the CRI with the death of Fr. Mike Crosby, O.F.M., Cap.

The day’s process was facilitated by Marlene Weisenbeck, FSPA, ​with presentations ​by Frank Sherman, Peg Groth, ​and ​Mark Peters. We spent time in groups discussing the external and internal ​trends impacting our vision and mission​ leading to a SWOT (strengths, weakness, opportunity and threats) analysis​.​ ​The members ​then ​​shared thoughts on ​objectives and strategies for the next 3-5 years​ and ​some specific actions to facilitate this.

After this discussion, we discerned what would be a possible organizational model which may facilitate our agreed upon mission and vision.

​ I found the workshop to be both challenging and energizing. Fr. Mike Crosby left us a 45 year legacy of shareholder engagement. Despite the headwinds of a challenging political environment and the changing demographics of our members, the group came away feeling that this ministry has been a catalyst for change and we must continue in Mike’s footsteps to bring good news to the poor and God’s creation.