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In recent years, the concept of “woke” investing has gained traction, reflecting a growing trend towards aligning investment decisions with social and environmental values. Woke investing prioritizes considerations such as environmental sustainability, social justice, and corporate ethics, with a desired goal to make a positive impact beyond financial returns. However, for many Christians, investing goes beyond mere financial gain; it’s a reflection of deeply held beliefs and values rooted in biblical principles. Christian investing emphasizes stewardship, integrity, and aligning investment decisions with God’s purposes. 

In this episode, we’ll define the terms of woke and Christian investing, examining how these approaches differ, along with speaking to the unique opportunities for investors seeking to make a meaningful impact in the world while honoring their faith.  Join us as we navigate the complex terrain of woke vs Christian investing and uncover the possibilities for the good steward the building of a more spiritually aligned investment portfolio.



Define Terms

 

Environmental, Social, and Governance (ESG)

ESG stands for Environmental, Social, and Governance, and it refers to a set of criteria used by investors to evaluate companies and investments based on their environmental, social, and governance practices. Here’s a breakdown of each component…or otherwise called the three “pillars”:

  • Environmental: This aspect of ESG considers how a company manages its impact on the environment. It includes factors such as carbon emissions, energy efficiency, waste management, pollution prevention, and resource conservation. In short, it is how an organization affects the planet
  • Social: The social dimension of ESG focuses on how a company interacts with its stakeholders, including employees, customers, communities, and society at large. It encompasses issues such as labor practices, human rights, diversity and inclusion, product safety, community engagement, and philanthropy.
  • Governance: Governance refers to the systems and structures that guide corporate decision-making, accountability, and transparency. It includes factors such as board composition, executive compensation, shareholder rights, ethics and integrity, risk management, and regulatory compliance. This “governance” includes if they are operating with transparency on many levels.

 

Biblically Responsible Investing (BRI) // “Christian Investing”

BRI refers to an approach to investing that integrates biblical principles and values into the investment decision-making process. BRI seeks to align investment choices with Christian beliefs and ethics, reflecting a commitment to stewardship, integrity, and honoring God in all financial endeavors.

Key characteristics of Biblically Responsible Investing include:

  • Alignment with Biblical Principles: BRI prioritizes investments in companies that adhere to biblical values and principles. This may involve avoiding businesses involved in activities deemed inconsistent with Christian teachings, such as those related to abortion, pornography, alcohol, tobacco, gambling, or unethical labor practices.
  • Positive Impact: BRI seeks to make a positive impact on society and the environment by supporting companies that demonstrate responsible and sustainable business practices. This may include investing in companies that prioritize environmental stewardship, social justice (through a Biblical worldview), community engagement, and ethical governance.
  • Screening Process: BRI investors often use screening criteria to evaluate potential investments based on their adherence to biblical values. These screening criteria may vary depending on the specific beliefs and priorities of individual investors or BRI funds, but they generally aim to exclude companies involved in morally objectionable and even questionable activities while favoring those that uphold Biblical principles.
  • Financial Performance: While BRI emphasizes adherence to biblical values, it also recognizes the importance of generating competitive financial returns. BRI investors seek to achieve their financial goals while remaining faithful to their Biblical convictions, balancing the pursuit of profit with ethical considerations.
  • Overall, Biblically Responsible Investing offers investors the opportunity to align their investment portfolios with their faith, supporting companies that uphold biblical values that contribute to the flourishing of individuals, communities, and the positive stewardship of the world as mandated in Gen. 2:15.

In short, BRI is the practice of avoiding investing in companies whose primary purpose is to promote or profit from activities which are explicitly sinful. Since God determines what is good and what is sinful, we should not invest in anything that profits from sinful activities (Episode 035)

 

What is “Woke” and Why is it Bad?

Being “woke” implies being conscious of societal issues, understanding the complexities of social dynamics, and actively working towards social justice and equity.

The issue with woke is that:

  • It presumes that the majority is seeking to exploit the minority. 
  • It presumes racism, classism, sexism, and bias in every interaction, hiding behind every corner and under every stone. One of the ways it works itself out is to not simply defend the minority class, but to almost venerate those on the fringes of society, leading to intersectionality. 

When we talk about minorities, we’re not talking primarily about race. But the term includes anyone who is seen as disadvantaged. This may include socioeconomic status, sexual identity and orientation, disability, and even political affiliation. 

The issue is, there is no concrete way of defining the disadvantaged and the privileged because the terms keep on changing. There is no baseline! So when we talk about accountability within companies that subscribe to ESG, their terms are always changing. What is right and what is wrong will change depending on the latest social movement and trend.

 

How is ESG “Woke”?

  • Socially Conscious Investing: Both “woke” perspectives and ESG investing prioritize social responsibility and ethical considerations. 
    • ESG investors may seek to invest in companies that demonstrate a commitment to diversity, inclusion, human rights, and community development, aligning with the values of social justice and equality.
    • DEI – Diversity, Equity, and Inclusion – is a Human Resources (HR) initiative to intentionally hire employees to increase diversity quotas rather than hiring the most qualified candidate. 
  • Environmental Awareness: ESG investing places a strong emphasis on environmental sustainability which includes addressing climate change. 
    • Similarly, being “woke” often involves advocating for environmental justice and sustainability practices that mitigate harm to marginalized communities disproportionately affected by environmental degradation.
  • Corporate Accountability: ESG investing encourages companies to adopt transparent governance practices and be accountable for their social and environmental impacts. This aligns with the “woke” perspective of holding institutions accountable for their actions and advocating for corporate responsibility and accountability.

 

How is BRI Different from ESG?

In BRI, what is right and wrong is defined by the Word of God, not the culture or cultural interest of that given day. Christian investing values some things similarly, but most things are radically different from ESG, such as:

  • We care about the governance of companies in that they have the stakeholders in mind when they make decisions. We want to make sure that CEOs are not milking the company for all its worth and having a board full of “yes-men”. BRI cares about this because these situations will almost always lead to bad outcomes and poor decisions.
  • We do care about not polluting the environment because God created it! But we’re not going to get to the point of creating carbon offsets or indulgence taxes. There is a lot of corruption in the business of carbon offsets. 

The major difference is found in what we value. Our values are not first and foremost of a social or environmental nature, as much as they are concerned with a Biblical nature. Are companies producing goods and services that are good for the world according to God’s definition of good? BRI seeks to avoid investing in companies that produce “bads” and invest in companies that produce “goods.” 

It is important to note that just because a company is in a BRI portfolio does not necessarily mean that they are explicitly Christian. But what it does mean is that they are not offending the Christian worldview.

 

Is BRI All About Just Avoiding Bad Companies, or Embracing Good Companies?

Not all BRI product providers do BRI the same way. 

One of the oldest platters in the BRI space is a group called Timothy Plan. They are focused primarily on avoiding the bad companies. As of today, to our knowledge, have no positive screening elements that would include positive values, other than valuation. Therefore, I don’t think they have a framework set up to embrace companies that are doing good. 

Other BRI providers will seek to actually embrace companies that are doing positive ‘goods.’ An example of this is an investment company called Eventide along with a few Crossmark funds. 

Some BRI companies engage with corporations to encourage them to operate in a more Biblically responsible manner. These organizations may fail certain BRI screenings on one level or another, but who are open in engaging in dialogue and discussion with Christian values. Among those companies that are making this difference would include Eventide, Crossmark, and Guidestone.

Again, it is important to note that not all BRI providers are the same. 

The Life Financial Group (our parent company) seeks a different approach where we want to engage with and embrace the various types of approaches because we want the BRI space to succeed and to prosper. 

Therefore, we are happy to have both a Timothy Plan and a Guidestone in a portfolio, even though they may not “embrace” as much as we would like. 

 

Does BRI Have Good Investment Returns? Is it Less than ESG?

Recent studies comparing BRI to non-BRI models show that there is no significant long-term underperformance of BRI in general. 

In other anecdotal studies, one of the big broker dealers finally allowed BRI investing to take place, but the compliance office required all of their clients to sign a waiver saying that they understand that this may result in higher risk and lower returns. But the reality was, these portfolios outperformed the other portfolios by a significant margin. Those waivers were finally eliminated.

Now, that is not to say that BRI will always be more profitable. There are times when BRI can lag. Think about the recent FAANG stocks, with these large technology companies that produced the majority of returns in the market, if you were Biblically focused, you couldn’t own some of these big names and therefore could not have enjoyed their incredible short-term returns. 

One other factor to acknowledge is that most BRI investing focuses on medium to small sized companies. Most of the big dogs in the investing space have bowed down to the idol of DEI and ESG investing and operate in a way that is antithetical to a Christian worldview. Therefore, you will find that you are not going to have an easy S&P 500 replacement in a BRI framework. There are some out there, but they won’t be as squeaky clean as a true BRI model.

ESG and BRI typically have higher expense ratios than non-ESG and non-BRI funds or options. This may reduce performance just because they are more expensive to have and to operate. However, our opinion is that it is worth the expense to have the peace of mind of aligning your investments with your values.

 

Do You Exclusively Do BRI?

The reality is, at our company, we allow our clients to have their own opinions and convictions, and we are going to invest in a way that encourages and supports our clients. If they want BRI, they will get BRI. For some of our clients that have small portfolios, we can invest them simply and cheaply for the time being. As they grow, it might make sense later on to get into a BRI framework.

 

Stewardship Application

I’ve never processed BRI before… What do I do?

We are not doing this episode to guilt or shame you if you are not investing in a BRI way. 

As for many people we encounter, you may be just like them and you simply have not known that it is an option for you!  Sadly, people generally don’t speak about it very much. It’s fairly new. 

Since you now know about it, and if you want to make a change, that is great news…and we would be glad to assist you in navigating toward becoming an even better steward by honoring God with your investments!

How can that happen, do as many others have done…schedule a Personal Stewardship Review and let us help guide you towards becoming an even better steward that honors God through responsible and sound investing that impacts people along with His Kingdom work here on earth!

 

Next Steps

 

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The topics discussed in this podcast are for general information only and are not intended to provide specific investment advice or recommendations.Investing and investment strategies involve risk including the potential loss of principal. Past performance is not a guarantee of future results.

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