Three ways to redeem stock market investing
As an investment professional with a background in theology, I was already committed to honoring Christ in other aspects of my life. But bringing biblical thinking to the stock market didn’t make sense to me.
Can we really integrate the Bible and investing without distorting one or the other?
Facing Up to My Concerns
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When I first heard about faith-driven investing, I wondered if it involved theological gymnastics or manipulation of Scripture. Was it just a fresh marketing approach for Christians? A friend had warned me, “If someone claims to offer Christian investments, I’d avoid them altogether.”
Looking back, I agree that we need to be aware of religious-affinity fraud as a real problem in some instances. However, many devout Christian advisors across the country offer competent, professional investment advice. Some even join faith-based networks and associations to receive education, credentialing and accountability for their work.
My other realization was that most Christian advisors didn’t study theology, and most church leaders didn’t study finance. Perhaps conversations between them could be deepened and improved. Rather than complain that pastors weren’t savvy enough, or that advisors weren’t theological enough, perhaps this was an area I could lean into and support in some way.
From Conscience to Impact
For the last several decades, one of the best-known expressions of faith-based investing has been investing for a clean conscience. This approach sought to avoid investing in morally bad companies by screening them out for involvement with things like tobacco, gambling, alcohol, or abortion. People knew it by the list of things they were trying to avoid.
While some people view investors as responsible for the sins of companies in their portfolio, my studies led me to see that relationship as more nuanced and complex. There is often a gap of ignorance between retail investors and companies in their portfolio. People don’t know what they are investing in, and if they do, they often have no idea what might be done about it.
I also knew that for retail investors, negative screening was a lost opportunity to address the moral misdeeds of corporations. By avoiding investing in certain bad companies, Christians were losing their voice to speak into those very boardrooms and company decisions.
This led me into a larger conversation about making an impact for good, not just trying to avoid association with evil. Today, this vision has captured the attention of faith-driven investors. More and more believers want to make an impact for good, in and through their investments.
Three Redemptive Strategies
Thanks to the work of many, investors have access to several positive strategies for doing good on Wall Street. Today retail investors can invest redemptively in at least three ways.
1. Integrating Values: This strategy shows up when an investment manager uses a moral lens to shape how they analyze and select companies to invest in. For example, some funds seek to invest in companies that meet basic human needs, support medical research, or demonstrate better care for the earth’s resources.
Rather than screening out bad companies, they look for companies that are making a positive contribution in the world. Obviously, this cannot guarantee a superior return or immediate social change. But it seeks to make the world a better place by promoting companies with a higher set of moral ideals.
2. Impact Investing:A second strategy is to invest in funds that seek to make an intentional, measurable impact on various social or environmental problems. Some faith-based funds seek to make an impact by investing in affordable housing, microfinance for medical clinics, development of renewable energy sources, and making loans to help start better schools in America and around the world.
While this strategy of “impact investing” is less common in the public markets, a few faith-based mutual funds have taken strides toward implementing it.
3. Engaging Companies: A third strategy is to engage in conversation with corporations about their practices that violate our moral values. This can take many forms. Some funds have engaged in long-term dialogue with companies about issues like forced child labor in chocolate production, or anticompetitive drug pricing. Others seek to use proxy voting or make official statements at regular investor meetings.
Since no corporation is perfect, this gives Christian investors an opportunity to have a measure of influence in the boardroom. It can be an effective way to express Christian ideals in the world and can lead to change in corporate behavior.
Making a Difference
Investments today influence how companies behave tomorrow. But, as Ken Barnes notes in his book Redeeming Capitalism, “markets have been around for centuries and there are no quick fixes available to those seeking to redeem them.” (p. 185)
A robust, biblical theology has more to say about how we handle money than just these three investing strategies – but I believe it would not say less. Investment strategies that seek to integrate our Christian faith can help believers honor the Lord and bless the world.
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Required Disclosure:
The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual. No investment strategy assures financial success or protects against loss. Past performance is no guarantee of future results. Investing in mutual funds involves risk, including possible loss of principal.
Socially Responsible Investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.
Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC. WaterRock Financial, LLC is a separate entity from LPL Financial.
Luke Bolton serves as director of operations at WaterRock Financial near Minneapolis, Minnesota. He earned a BA in theology at Northland International University and an MA in biblical studies at Central Baptist Theological Seminary. He and his wife are members at Bethlehem Baptist Church in Minneapolis. They enjoy exploring, reading, and having outdoor adventures with their two boys.
Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC. WaterRock Financial, LLC is a separate entity from LPL Financial.
