Developing an investing strategy aligned with one’s personal faith and values is an important consideration for many investors. This can involve integrating religious beliefs or ethical principles into investment decisions when selecting assets or building a portfolio. A faith-driven investment strategy often focuses on areas like social responsibility, environmental sustainability, corporate governance, and community development. Crafting such an approach requires research, self-reflection on core values, and an understanding of how to translate beliefs into investment policies. Key considerations include screening potential investments, choosing investment products or asset classes that enable value alignment, and pursuing shareholder advocacy.
Defining personal values and investment priorities
The first step in developing a faith-driven investing strategy is to carefully define one’s personal religious and ethical values and consider how to reflect those priorities in investment decision-making. This soul-searching process identifies key social or moral issues a person cares about, whether it be protecting the environment, avoiding industries like gambling or alcohol, promoting human rights and equality, or supporting religious causes and organizations. With core values clarified, investors can better screen investments, select assets, or engage with companies in a way that aligns with their principles.
Exploring values-based screening approaches
Many faith-driven investors use screening practices based on religious or ethical guidelines to restrict or avoid investing in certain companies or sectors. Common screening criteria include industries viewed as morally questionable by an investor’s belief system (like tobacco, weapons or adult entertainment), as well as environmental, social and governance (ESG) factors related to sustainability, labor rights and more. Negative screens exclude companies based on objectionable business activities, while positive screens actively identify and invest in firms that contribute to social goods. Investors can also use proxy voting to further religious values and stewardship goals.
Choosing investment products that enable values alignment
Beyond screening approaches, products like socially responsible investment (SRI) funds and faith-based portfolios allow investors to allocate capital in line with personal values while still pursuing financial goals. SRI funds use ESG criteria and moral screens in selecting holdings, providing diversified values-focused investments. Faith-based funds specifically cater to religious investors, emphasizing companies aligned with specific religious traditions. Alternatively, aligning investments by asset class based on values is possible for investors who prefer to custom craft portfolios versus using specialized SRI/faith-based products.
Pursuing ongoing shareholder advocacy
Faith-driven investors often view investment decisions as a way to positively influence corporate behavior and the world at large. Practicing values-focused ownership through shareholder proxy voting and corporate engagement campaigns allows religious investors to advocate on environmental, human rights and other ethical issues. Joining interfaith shareholder coalitions multiplies the influence of value-driven investors. Avoiding companies altogether is less impactful than using shareholder power to persuade firms to address issues of concern aligned with an investor’s belief system.
Integrating personal faith and values into an investment strategy requires self-examination, research and a methodical process. By defining core principles and priorities, screening potential investments, selectively choosing products and asset classes, and actively voting shares to steer corporate behavior, investors can develop holistic portfolios that align with religious beliefs.