5 REASONS NOT TO DO BIBLICALLY RESPONSIBLE INVESTING

Because of the specific niche of investing I do, I talk to a lot of people about money, how to grow it, and why it’s important to them.  Since Biblically Responsible Investing (BRI) is a new concept to many, questions and objections are a natural and important part of the learning process.  The following is a compilation of the five most common objections to BRI I’ve received over the years and how I might respond to each according to my personal convictions.

My account performance will suffer if I do BRI.

The investing universe has become absolutely saturated with data, research and commentary on mutual funds and ETFs.  Amongst them, faith-based investing firms have received more than their fair share of scrutiny.  And it’s almost always done under the guise of—you guessed it—underperformance.  It simply must be true that fund managers avoiding sin-laden companies could never prosper the way their less scrupulous peers do, right?  On the contrary, independent research suggests that virtuous companies seeking to avoid ill-gotten gain tend to reward their shareholders with more consistent long-term returns.*  Logically, it makes sense that companies seeking some semblance of virtue in their stewardship practices would experience lower levels of turnover, customer dissatisfaction, and public outcry; not to mention fewer cases of bankruptcy and corporate scandal.  And these are the kind of things that destroy shareholder value—overnight.  I love the way that faith-based Eventide Funds puts it: “What is right is also what is smart.”

“Better a little with righteousness than much gain with injustice.” (Proverbs 16:8)

Every company has its faults so I’m not going to worry about it.

A thinking person wouldn’t apply this logic to any other discipline in life, but for some reason, when it comes to investing, a little compromise seems to be permissible—if not expected.  I liken it to someone on a diet rationalizing, “since this restaurant doesn’t offer salads, I’m going to order the deep-fried fish and chips.”  All the while, the relatively guiltless grilled chicken sandwich offering gets completely neglected.  You see, in many ways, companies are like people, and while it’s true there are about as many perfect companies in the world as there are perfect people, that doesn’t mean there are not virtuous people in the world.  In the same way a virtuous person cares about his family, friends, and neighbors, and seeks to do them good and not harm, virtuous companies care about their stakeholders (e.g., investors, employees, customers, vendors, local communities, etc.) more than just profit margins.  And since companies are held accountable by their shareholders, the responsibility falls on investors like you and I to hold corporate America accountable when its virtues fall short of love. If we don’t, who will?

“Like a muddied spring or a polluted well are the righteous who give way to the wicked.” (Proverbs 25:26)

There aren’t enough ‘clean’ companies to create a diversified portfolio.

According to data collected by faith-based ETF manufacturer Inspire Investing on 4,500 publicly traded companies around the world, 88% meet or exceed a basic biblical screening criteria.  This does not necessarily mean a majority of companies are Christian, but it does mean that most have set standards about how they will treat stakeholders and what activities they will engage in—or not engage in—for financial advantage.  This data might come as a shock to some since we are bombarded almost daily with news stories about the depraved things everyday household brands are engaging in (Target and Bud Light come to mind lately).  These mega-cap companies seem to dominate the airwaves with their ideological agendas and surpluses of cash to dispense on social issues, but they do not accurately represent the vast investing landscape and the incredible opportunities available to conscientious investors.  And with the proliferation of excellent faith-based fund manufacturers like Eventide Funds, Inspire Investing, and The Timothy Plan, creating a well-diversified portfolio that aligns your dollars with your values has never been easier.

“Be sure you know the condition of your flocks, give careful attention to your herds…” (Proverbs 27:23)

Technically, I don’t ‘own’ any companies since my investments are in ETFs.

When it comes to investing in exchange-traded funds (ETFs), some claim they are not responsible for the underlying companies’ behavior because it’s the ETF, not the individual, that owns the companies.  While this might be true on a technicality, it smacks of something a friend of mine likes to call: the diffusion of responsibility.  A simplistic illustration of this reasoning could be seen in the rebuttal of a child playing with the food on his plate: “I wasn’t playing with my food, my fork was.”  At what point do we as investors become accountable for the companies we invest in?  Some believe we enter into culpability once we’ve purchased a company’s product or service.  While I believe it’s prudent to be a mindful consumer, I would argue ownership bears a much higher ethical responsibility than patronage and that culpability begins the moment we put our dollars in the pot expecting a return on investment.  Ownership—in any form—implies I’ve become a brand champion, as I root for that company’s success in all its endeavors, in hopes of increasing its share price and dividend returns in my pocket.

“Do not be deceived, God is not mocked; for whatever a man sows, that he will also reap.” (Galatians 6:7)

It doesn’t matter how I invest as long as I’m generous and well-meaning with the returns.

Under this assumption, it would be completely justifiable to rob a bank as long as you gave the money away to the poor.  But in case my example of sticking up a bank teller with a .38 caliber revolver comes off a little too extreme, let’s consider some of the actual activities publicly traded companies are engaged in to turn a profit.  Right now, in virtually every 401k Plan across America, you will find companies who market and distribute pornographic video footage of a heterosexual, bisexual, and transexual nature.  Some of the actors portrayed perform against their free will, being victims of heinous sex trafficking rings, and others because they’ve been dehumanized to the point of having no self-worth.  The footage is then made available for purchase on your teenager’s smartphone—as long as they consent to being over the age of 18.  Other companies are creating, marketing, and selling pharmaceutical drugs that, when taken by a pregnant mother, cut off life-supporting hormones to her fetus and then abort it from the womb.  This medication is designed to be taken at home where doctor supervision cannot happen.  These are the kinds of profit Americans are using to fund their son or daughter’s college education, build their retirement nest egg, and faithfully pay their tithe at church.  Perhaps it’s time we rethink whether or not the end justifies the means.

“You must not bring the earnings of a female prostitute or of a male prostitute into the house of the Lord your God to pay any vow, because the Lord you God detests them both.” (Deuteronomy 23:18)

If you’re ready to align your dollars with your values or want to learn more about Biblically Responsible Investing, shoot me an email or visit my website to schedule a 30-minute complimentary consultation today.

-Matt

*No strategy can guarantee positive investment results

References

https://www.inspireinvesting.com/faq

Advisory Services are offered through Creative Financial Designs, Inc., a Registered Investment Adviser, and Securities are offered through cfd Investments, Inc., a Registered Broker/Dealer, Member FINRA & SIPC, 2704 S. Goyer Rd., Kokomo, IN 46902. 765-453-9600.