God’s Stewards: A Global Overview of Christian-Influenced Mutual Fund Providers

Abstract

Despite a large amount of assets under management and a strong influence on the sustainable investment movement, very little is known about what ethical investing looks like from a Christian perspective. We therefore analyzed the ethical investment policies of a unique dataset of Christian-influenced mutual fund providers using a structured–thematic content analysis. In detail, we looked at investment screens, investment techniques, and the public presentation of non-financial investment objectives. We note that, by and large, there is no “Christian investing” in the sense of an ethical investment policy that most fund providers have similarly implemented. The proposed explanation for the diversity is that the policies are determined by differing approaches to interpreting biblical texts and by divergent social and political influence factors. However, we have detected a unifying element among most Christians-influenced mutual fund providers: the intention to positively influence their portfolio companies’ sustainability indicators.

1. Introduction

At first glance, faith and investing seem to have little in common: on the one hand, the rational logic of financial markets; on the other, the world of religion, which seems to be based on mere beliefs rather than facts. In the past, this apparent contradiction led to fierce opposition by religious institutions to financial markets (Lewison 1999). Today, however, the relationship between faith and investing is rather symbiotic, and faith-based investors manage trillions of assets worldwide.1

But faith-based investing (FBI) is not only an important factor in today’s global economy, it has had (and still has) a substantial influence on the sustainable investment movement: For example, from its very beginning, religious funds have been essential to the emergence of the socially responsible investment (SRI) industry (Kinder and Domini 1997; Kreander et al. 2004). More recently, religious investors have been an important factor in shaping the global sustainability agenda by advocating for the fulfillment of the UN Sustainable Development Goals (Palmer and Moss 2017) and combating climate change (ICCR 2015). Therefore, learning more about the different types of faith-based investment products also helps to increase the understanding of the wide range of ethical/sustainable finance products.

Theoretically, FBI covers all religiously affiliated investment approaches, but the two most important religions in that respect are Islam and Christianity (Adams and Ahmed 2013). In recent years, the topic of Islamic finance has gained increasing academic attention (Abdelsalam et al. 2014; Nainggolan et al. 2016; Ashraf 2016; Mazouz et al. 2019). However, despite substantial cultural, doctrinal, and conceptual differences (Arslan 2001; Nainggolan et al. 2016) between Islam and Christianity, very little is known about contemporary Christian finance in general and about the ethical investment policies of Christian-influenced mutual fund (CIF) providers in particular. The few authors that study the topic of CIF mainly focus on financial performance (Kurtz and Di Bartolomeo 2005; Naber 2001; Boasson et al. 2006; Adams and Ahmed 2013) and to a lesser extent on fund asset stability (Peifer 2011) or on the applied screens (Ghoul and Karam 2007; Dion 2009).

Our explorative study thus aims to provide more foundational knowledge on this topic. The objective is not a theological assessment but rather a status-quo report on the contemporary concepts and techniques of ethical investing from a Christian perspective. For this purpose, we applied Kuckartz’s (2018) structured–thematic content analysis to what is, to our knowledge, a unique dataset of 45 CIF providers, and thus deconstructed their ethical investment policies. For a targeted use of this method, precisely formulated research questions are needed because they are regularly referred back to in the evaluation process. Our three clearly outlined research questions on investment screens, investment techniques, and CIF providers’ intentions to positively impact the environment and society were therefore particularly well suited. Another strength of this method is that it can be used both to develop theories and to describe social phenomena (Hopf 2016). Moreover, even though this method originates from sociology, it can be applied in a multidisciplinary approach (Schwarz 2015). Finally, this approach allows for an open but systematic and rule-based investigation of both implicit and explicit communication and is therefore ideal for exploratory studies (Kuckartz 2022).

The first finding is that the investment screens that the CIF providers employ show substantial similarities: More than 75% of CIF providers screen with the same 10 criteria (out of a total of 15). However, this homogeneity only occurs when looking at the sample as a whole; instead, when comparing European CIF providers with their US counterparts, major differences emerge for some investment screens, for example, while European providers almost invariably address the issues of “climate change” and “weapons”, only about half of the U.S. providers do so. It is therefore suggested that social and political factors play an important role in determining the investment screens. There is also a high degree of heterogeneity within the different denominations. On the Catholic side, only seven filters were found in at least 80% of the CIF providers, and on the Protestant side only six filters are used by at least 80% of the CIF providers. The explanation we propose for this is that the progressive or conservative interpretation of the Christian Bible is more important for the selection of investment screens than the denominational designation “Catholic” or “Protestant”.

The second finding is that the investment techniques, e.g., exclusion or shareholder activism, are also implemented very heterogeneously by the CIF providers. Only exclusion (100%), positive approaches2 (78%), and shareholder activism (64%) are practiced by more than half of the providers. Interestingly, with positive approaches and shareholder activism, two techniques are widely used that have been identified in the literature as very effective in influencing corporate decisions (see, e.g., Slager and Chapple 2015; Zerbib 2019; Kölbel et al. 2020; or Hoepner et al. 2022).

The third finding is that, at around 70%, the majority of CIF providers emphasize the intention to positively impact the environment and society in their public presentation of non-financial investment objectives. Taken together, our results indicate that improving the sustainability performance of their portfolio companies is a core element of a “Christian” investment strategy. This aligns with the historic role of Christian investors as pioneers in using financial influence to achieve social and environmental impact (Teoh et al. 1999; Bifulco 2018; Diener 2022).

With our explorative study, we strive to extend the knowledge of faith-based investing in several aspects. First, to enable future research we provide a comprehensive literature overview of the status quo in research on Christian finance and point out interesting research avenues. Second, while some information is available on the number and assets under management of CIF providers, very little is known about what constitutes their “Christian” investment strategy. Thus, our study is one of the first to analyze in detail the ethical investment policies in this interesting niche market. For that purpose, we constructed a comprehensive database covering CIF providers and their investment offers worldwide. This unique database may also be helpful for further research in this area, e.g., on the financial performance of this type of fund or intrareligious comparisons. By also analyzing CIF providers outside the U.S., we overcome another deficit of previous research. Content wise, our comprehensive overview of applied CIF screens complements previous studies on this topic (Ghoul and Karam 2007; Dion 2009; Boasson et al. 2006). By not only describing the screens as such but also outlining the CIF providers’ rationale, we broaden the knowledge on this topic. Further, taking into account the upcoming impact discussion in the context of sustainable investing (see, for example, Kölbel et al. 2020; Busch et al. 2021; Heeb et al. 2021; Diener and Habisch 2022; Diener 2022), we analyze the techniques the CIF providers apply. To our knowledge, no other study approaches this topic in such a way.

A deeper knowledge of CIF providers also enhances the understanding of ethical/sustainable financial products. Therefore, our findings may provide some indications for a better understanding of these “secular” counterparts as well. Finally, this article not only contributes to the academic discourse but also provides insights into the professional practice of CIF providers, which should also be of relevance to other players in the financial market.

The remainder of the article is structured as follows. Section 2 outlines how Christian finance has developed and summarizes the status quo in research on this topic. In Section 3, we briefly describe the data used in the study and the applied methodology. In Section 4, we present the empirical results of our analysis of the screens, the techniques, and the public presentation of CIF providers’ non-financial investment objectives. We end in Section 5 with a brief conclusion.

2. Review of Literature

2.1. Historical Development of Christian Finance

The relation between Christian faith and economic behavior can be traced back to the origins of the Christian tradition with the biblical documents. Here, more than 2000 Bible verses are directed to the use of money and possessions (Dayton 1981). Those teachings on a wider scale corresponded with the Christian church prohibiting the charging of interest by clerics at the Council of Nicea in 325. In the following centuries, the churches imposed restrictions on loans, interest payments, and investments in various forms. For example, in 850 usurers were excommunicated, in the eleventh century usury was equated with robbery, and in 1139 usury was finally banned altogether. Starting in the 15th century, theologians and philosophers started to argue against the ban—emphasizing the difference between investment and consumptive uses of loans. However, officially the ban was not relaxed until the 19th century (Lewison 1999).

Besides the rejection of usury, investors also opposed certain economic practices with reference to their religious convictions. For example, in the 17th century the Quaker movement boycotted companies that profited from slavery or war (Kinder and Domini 1997), and during the 1920s the Methodist Church in the U.K. declined to invest in “sinful” companies, i.e., companies in the tobacco, alcohol, gambling, or arms industries (Renneboog et al. 2008).

Christian groups have also played an essential role in the emergence of the socially responsible investing (SRI) industry. The first SRI fund was issued in 1928 by a religious group, the Pioneer Fund, with the aim to exclude investments in tobacco, alcohol, and gambling (Kinder and Domini 1997). The first SRI retail fund in Europe was issued in 1965 in Sweden, and in the process of its development various churches gave their input. The first SRI fund that received a broad audience in the U.S.A., the Pax World Fund in 1971, was influenced by Quaker and Methodists and excluded alcohol, gambling, and armament manufacturers (Kreander et al. 2004).

With the maturing of SRI, the focus of Christian investing has more and more shifted away from the avoidance approach to creating actual impact (Diener 2022). In the early 1970s, Christian churches were amongst the initiators of the divestment movement against the South African apartheid regime (Teoh et al. 1999). Nowadays, religious investors such as the Interfaith Center on Corporate Responsibility (ICCR) are important advocates for addressing the climate crisis (ICCR 2015) or fulfilling the UN Sustainable Development Goals (Palmer and Moss 2017). In addition, two Christian pension funds, Christian Super and Westpath Investment Management, were among the first signatories to the UN Principles for Responsible Investment (Bifulco 2018), and religious investors are consistently the most active filers of shareholder proposals in the United States (US SIF 2018).

2.2. Overview of the State of Research in the Field of Christian Finance

While the historical development of Christian finance has been subject to many publications, very little is known about contemporary Christian finance and especially the ethical investment strategies of CIF providers. The first topic is the investment behavior of different Christian organizations. Inskeep (1992) analyzes the investment behavior of the Lutheran church in the U.S.A. and finds that most members of the church’s pension funds were reluctant or unwilling to change their investment portfolio to pursue more social justice. Kreander et al. (2004) study the investment behavior of the Church of England and the Methodist Church in the United Kingdom. They find the churches to have harmonized their investments with their theological doctrine and document a long history of using ethical criteria based thereon. However, they find some investments, such as in nuclear power utilities, match the churches’ ethical criteria but seem to be problematic from a theological perspective. van Cranenburgh et al. (2014) examine how religious organizations practice their faith through their investments, with a focus on shareholder engagement. A structured belief system, a grassroots network, and a long-term perspective were identified as key features influencing their engagement.

Goodman et al. (2014) explore how and why religious organizations use ‘voice’ and ‘exit’ (Hirschman 1970) in shareholder engagement. They note that religious organizations divest rather for political motives than for economic ones thereby using divestment as a form of ‘voice’. In general, for religious organizations a silent exit is out of the question; divestment does not always result from unsatisfactory voice results, and voice may continue despite exiting an investment. Smith and Smith (2016) in their study contrast the investment practices of church-affiliated schools with those of independent schools. They find that the former group implements SRI policies more frequently, paying particular attention to environmental, social, and governance (ESG) concerns; contraception; and so-called “sin stocks”. Catholic and Baptist schools showed the highest screening intensity within the church-affiliated schools.

A second research topic is the influence of the Christian identity on the risk preference of retail investors. Noussair et al. (2013) link church membership or attendance to the individuals’ risk preference and find clear evidence that religious practice induces greater risk aversion. Further, they document that a religious upbringing has significantly weaker effects, and that, under real cash payoff conditions, Protestants are more risk averse than Catholics. Conversely, Gebauer et al. (2012) claim that the higher risk aversion of church members stems from social aspects of church membership rather than from religious convictions.

A third research topic in that context is the influence of religion on the general willingness to invest in SRI funds. Czerwonka (2014) concludes that so-called “church goers” are more willing to invest in SRI than non-religious investors. She explains this finding by the desire of practicing believers to align their investments with their faith. In contrast, Brimble et al. (2013) find that religious beliefs have no significant influence on the investment decision process of retail investors. They also find that the importance attached to SRI and financial criteria is similar in most cases among more and less religious people.

The specific case of CIFs has been analyzed as well. The following

Table 1. Overview of studies addressing CIFs.

Study	Topic	Results
Naber (2001)	Financial performance of Catholic portfolio vs. sin stocks and conventional portfolio	Catholic portfolio and conventional portfolio with similia performance; sin stocks with higher risk-adjusted returns
Kurtz and Di Bartolomeo (2005)	Financial performance of Catholic Values 400 Index vs. S&P 500	CV 400 with higher valuation ratios, stronger anticipated growth, lower correlation with the overall market, and lower market capitalization
Boasson et al. (2006)	Financial performance of five CIFs vs. S&P 500	Neutral performance; best performing CIF with the strictest exclusion criteria
Ghoul and Karam (2007)	Investment screening practices of USCCB vs. Dow Jones Islamic Index vs. SRI funds	Unique for Islamic funds is objection to interest, pork, and music, and for Christian funds the opposition to alternative lifestyles, i.e., fornication and homosexuality
Dion (2009)	Investment screening practices of three CIF providers	29.6% of controversial companies were part of the portfolio of at least one of the funds
Peifer (2011)	Fund asset stability of religious funds	Assets in religious funds are more stable than assets in conventional funds
Adams and Ahmed (2013)	Financial performance of Shariah-compliant funds, CIFs, and SRI funds vs. all U.S. funds	Neutral performance; CIFs with the lowest expense ratio

gives an overview of the studies and their results.

The first research topic is the question of whether faith-based investments are possible without sacrificing satisfactory financial returns. Kurtz and Di Bartolomeo (2005) document that an investment in the KLD Catholic Values 400 Index (CV 400) (an index that invests according to the teachings of the Catholic Church) outperforms the S&P 500: The CV 400 shows higher valuation ratios as well as stronger anticipated growth. It also shows a lower correlation with the overall market and—due to its lower popularity—a smaller market capitalization.

Adams and Ahmed (2013) compare the performance of 95 Shariah-compliant, CIF, and SRI fund families with one another and the overall market. They document statistically (and economically) insignificant differences in the financial performance of all four groups. Boasson et al. (2006) use a four-factor Carhart model to compare the S&P 500 with a sample of seven CIFs. On a risk-adjusted basis, they find no underperformance of the CIF sample; they further document that the CIF with the strictest exclusion criteria delivered the best performance. Naber (2001) compares the performances of a conventional portfolio, a ‘sin stock’ portfolio, and a Catholic portfolio that screens out ‘sin stocks’. She states that on a risk-adjusted basis there is no significant return difference between the conventional and the Catholic portfolios. However, she finds significantly higher risk-adjusted returns for the ‘sin stock’ portfolio.

The second topic is fund asset stability. Here, Peifer (2011) analyzes the influence of religion on the investment behavior of retail investors. He finds that assets in religious funds are more stable than assets in conventional funds and attributes this finding to the moral orientation of religious investors.

The third topic is investment screening practices. Dion (2009) compares a sample of three CIFs regarding how well they screen out questionable companies. For that purpose, he compares whether and, if so, how many of the companies on which the ICCR filed shareholder resolutions were included in the CIFs’ investment portfolios. He finds that a striking 29.6% were part of the portfolio of at least one of the funds. Ghoul and Karam (2007) compare the applied screens of the United States Conference of Catholic Bishops (USCCB) with the screening criteria of the Dow Jones Islamic Index and a sample of SRI funds. Their finding is that all three groups have very similar screening criteria, while the main differences are in the Islamic funds’ objection to interest, pork, and music companies, whereas the unique screens for Christian funds are on alternative lifestyles, i.e., fornication and homosexuality.

More often, the topic of screening is addressed to a lesser extent in studies primarily analyzing the financial performance of CIFs. Here, Kurtz and Di Bartolomeo (2005) outline in detail the construction and the investment screens of the KLD Catholic Values 400 Index. Further, they qualify the difficulties of applying these criteria in practice and notice that, for example, the issue of stem cell research is difficult to determine. The studies of Boasson et al. (2006) and Adams and Ahmed (2013) also cover the topic of screens. While the former takes a closer look at the applied screening factors of seven CIF providers and derives an explanation for two of the screens (abortion and pornography) based on the Bible, the latter very briefly compares the screening criteria of funds for evangelical Christians, Catholics, Protestants, and Muslims.

The problem with all these studies is that they either rely on a single secondary source (Ghoul and Karam 2007; Kurtz and Di Bartolomeo 2005), cover a very small sample (Dion 2009; Boasson et al. 2006), or provide a very general perspective (Adams and Ahmed 2013). Further, the studies often do not explain why and how the screens are derived and justified.

A topic which has not been addressed at all so far is the topic of the ethical investment techniques of CIF providers, although it is crucial for any investment product to understand how it achieves its promised returns—be it financial or non-financial (Diener and Habisch 2021). In our analysis of the techniques, we place special emphasis on the non-financial return, i.e., the impact that investors can achieve with the respective technique. This perspective is increasingly emphasized by different stakeholders as global sustainability challenges such as climate change mitigation or the achievement of the UN Sustainable Development Goals (SDGs) become more important. For example, in its Action Plan for a Greener and Cleaner Economy, the European Commission now identifies sustainable investment as an important instrument for fulfilling the Paris Agreement (European Commission 2018). In other jurisdictions, institutional investors must disclose how they consider ESG factors in their investment decisions (OECD 2017). Investors are becoming more mindful of how their investments affect sustainability indicators when selecting their investment provider (Wins and Zwergel 2016; Bauer et al. 2019; Barber et al. 2021), and the impact perspective becomes increasingly relevant in the academic discussion (see, for example, Kölbel et al. 2020; Busch et al. 2021; Heeb et al. 2021; Diener and Habisch 2022; Diener 2022). Finally, given the high importance of a responsible stewardship of the natural resources for Christian churches (Cui et al. 2015) and the social proclamation of the Catholic Church that obliges Christians to engage in more social shaping in the business world (Emunds and Patenge 2016), it seems appropriate to pay more attention to the impact of the applied techniques of CIF providers.

This lack of research on what ethical investing looks like from a Christian perspective is the starting point for our explorative study. We used qualitative content analysis to deconstruct the ethical investment policies of a large sample of CIF providers, which to our knowledge is a unique dataset. In the following chapter, we will describe how we compiled this dataset and explain our methodological approach in more detail.

3. Data and Method

In our study, a CIF provider was distinguished through a clear reference to a Christian identity in its self-presentation, for example, in the fund prospectus or on the website. On this premise, we have compiled the first globally comprehensive database of CIF providers with publicly traded investment offerings. To that end, we proceeded as follows: First, using the Bloomberg database, we employed a combination of category search and elaborate keyword search techniques to retrieve potential CIF providers. Second, we systematically searched the internet as well as mutual fund databases by using similar keywords in five different languages (English, German, Spanish, French, and Italian). Third, we complemented this list by asking church representatives, mutual fund industry experts, and interest group representatives from different institutions—such as the UN Principles for Responsible Investment (PRI), European Sustainable Investment Forum (Eurosif), the Corporate Responsibility Interface Center (CRIC), and the Association of Christian Financial Advisers (ACFA)—if they were missing any CIF providers in the list. Finally, we compared our list to those compiled by Boasson et al. (2006), Peifer (2011), and Ferruz et al. (2012) and added CIF providers that were not a part of our initial selection.

To increase comparability, we included only those CIF providers in our final database that offered actively managed mutual stock or mutual balanced funds, and no providers of exchange-traded funds. Furthermore, we only selected companies that offered publicly traded mutual funds because they are subject to higher transparency requirements. For the remaining CIF providers, we confirmed the Christian as well as the SRI orientation, checked whether the funds were still active, if fund families had been merged, and if they consulted the same advisory board to stipulate their investment strategy. If those disclosures were not made, we contacted the fund providers directly and excluded those from the database that either did not meet the mentioned criteria or failed to elucidate their approach.

We collected the information on these CIF providers between 1 October 2020 and 31 January 2021. We included publicly available data only to reflect the market-oriented self-presentation. Moreover, we captured the websites in their original format with a web collector and gathered supplementary material (investment guidelines, position papers) with general information about the CIF providers. Additionally, we systematically collected fund-specific material such as fund prospectuses and annual and semi-annual reports. All the documents of a fund provider formed a case, resulting in 45 cases in total (see Appendix A,

Table A1. Overview of all CIF Providers.

Responsible for Ethical Investment Strategy	Country	Denominational Orientation
3 Banken Generali	Austria	Catholic
Schelhammer Capital Bank AG	Austria	Catholic
Erste Sparinvest Asset Management	Austria	Catholic
Kepler-Fonds KAG	Austria	Catholic
Raiffeisenbank International	Austria	Catholic
Allianz Global Investors	France	Catholic
Equigest	France	Catholic
Federal Finance Gestion	France	Catholic
Etique et Investissement	France	Catholic
ProClero	France	Catholic
Ampega Asset Management GmbH	Germany	Catholic
Bank für Kirche und Caritas eG	Germany	Catholic
Bank im Bistum Essen	Germany	Catholic
Deka Bank	Germany	Catholic and Protestant
Deutsche Kirchenbanken	Germany	Catholic and Protestant
Evangelische Bank	Germany	Protestant (Lutheran)
Green Benefit AG	Germany	Protestant (Evangelical)
Invesco Asset Management Deutschland GmbH	Germany	Catholic
KD Bank und Brot für die Welt	Germany	Catholic and Protestant
Liga-Pax Bank	Germany	Catholic
Lyxor Asset Management	Germany	Catholic
Salm-Salm & Partner GmbH	Germany	Catholic
Stadtsparkasse Düsseldorf	Germany	Catholic
Steyler Bank	Germany	Catholic
Wettlauffer Wirtschaftsberatung	Germany	Catholic and Protestant
Altum Faithfuk Investing	Spain	Catholic
BNP Paribas	Spain	Catholic
Julius Bär	Spain	Catholic
Sabadell	Spain	Catholic
Santander	Spain	Catholic
Bank J. Safra Sarasin	Switzerland	Protestant
CCLA Investment Management	UK	Protestant (Anglican)
Epworth Investment Management	UK	Protestant (Methodist)
Ave Maria Mutual Funds Group	USA	Catholic
Dana Investments	USA	Catholic
Eventide Asset Management	USA	Protestant (Evangelical)
Everence Financial	USA	Protestant (Anabaptist-Christian)
GuideStone Financial Resources	USA	Protestant (Baptist)
Kights of Columbus	USA	Catholic
LKCM Aquinas Funds	USA	Catholic
New Covenant Funds	USA	Protestant (Presbytarian)
SEI	USA	Catholic
Steward Mutual Funds	USA	Protestant (Evangelical)
The American Trust Allegiance Fund	USA	Protestant (First Church of Christ, Scientist)
Timothy Plan	USA	Protestant (Evangelical)

for an overview of all CIF providers in our sample).

We analyzed the entire sample to make general statements about CIF providers. In total, we screened more than 400 documents with around 8500 pages from CIF providers from the U.S.A., Switzerland, Germany, Spain, France, Austria, and the U.K. Methodologically, we employed the structured–thematic content analysis of Kuckartz (2018). This approach enables an open but systematic and rule-based examination of both implicit and explicit communication and is therefore ideal for explorative studies (Kuckartz 2022).

For the thematic content analysis of the 45 cases, we used the data analysis software MAXQDA 2022 (VERBI Software 2020). Adopting an exploratory–inductive design, we first structured the data based on our research question. For this purpose, we coded each segment of the material that provided any information on investment screens, investment techniques, or the public presentation of non-financial investment objectives. We then used an iterative process to create top categories and allocated each segment to one of them. In the following step, we functionally reduced the top categories, so that only clearly differentiable categories remained. Those remaining categories were then discussed to identify the categories that best described the ethical investment policy of a CIF provider. That way, we identified 15 screens (see Appendix B,

Table A2. Definition of Investment Screens.

Screen	Definition
Environmental Destruction	This code will be used for screens that adress envorinmental destruction, e.g., use of water, dangerous chemical or polution. Also positive screens to protect the environment are included here. The specific case of climate change is an own category.
Climate Change	This code will be used for every activity to fight climate change (positive screening, e.g., renewable energy or electric vehicles) or to exclude activities that foster the climate change (e.g., fossil fuels, fracking, coal, oil sand etc.). This is a separate code to environmental destruction.
Genetic Engineering	This code will be used for any mention to screen for genetic engineering i. e. changes in the DNA of plants or animals. Genetic engineering of humans i.e. cloning is part of the embryonic stem cells code.
Nuclear Power	This code will be used for any mention to screen for business activities around the generation of nuclear energy e.g., uran exploration, nuclear power plant construction or nuclear power plant operation. This code does not apply to screens that adress nuclear weapons (this is a different category).
Animal Treatment	This code will be used for any mention to screen for the treatment of animals, e.g., animal testing or farm animal welfare or furs.
Human Rights	This code will be used for any mention to screen for human rights and human dignity in general, but also in the case of more specific human rights issues such as for example discrimination, diversity or exploitation of human (e.g., child labour, labour rights, working conditions etc.). In addition, norms such as ILO or OECD guidelines are coded here. This code is used for actions of the company, but also for actions of its suppliers and subsidiaries.
Weapons	This code will be used for any mention to screen for weapons, military, defense, or armaments. Sometimes it is specified to be only controversial or mass destruction/ABC weapons, sometimes its very general.
Pornography	This code will be used for any mention to screen for adult entertainment or pornography or other ways of sexual presentation.
Tobacco	This code will be used for any mention to screen for tobacco, such as production or distribution.
Embryonic Stem Cells	This code will be used for any mention to screen for the use of or research on embryonic stem cells. Cloning is also part of this. It is a subcode of unborn human life. Protection of human life is coded here and with abortion as both address the right to life—but not with contraception (as before conception there is no life to protect). Health Care and pharmaceuticals is too wide to make any conclusions.
Alcohol	This code will be used for any mention to screen for alcohol, such as production or distribution. Sometimes it is specified to be only high concentration alcohol, sometimes it’s very general.
Gambling	This code will be used for any mention to screen for gambling, e.g., production, operation or distribution. Sometimes it is specified to be only controversial gambling activities, sometimes it’s very general.
Abortion	This code will be used for any mention to screen for abortion, e.g., clinics or abortifacients and the protection of the unborn life. Planned Parenthood is coded here as well as with contraception as they offer both as a service. Protection of human life is coded here and with embryonic stem cells as both address the right to life—but not with contraception (as before conception there is no life to protect). Health Care and pharmaceuticals is too wide to make any conclusions.
Contraception	This code will be used for any mention to screen for contraceptives (sometimes very technical definition what “contraception” is). Planned Parenthood is coded here as well as with abortion as they offer both as a service. Protection of human life is NOT coded here (as before conception there is no life to protect), but it is coded with abortion and with embryonic stem cells as both address the right to life. Health Care and pharmaceuticals is too wide to make any conclusions.
Governance Issues	This code will be used for any mention to screen for governance topics e.g., executive compensation, board structure, control or shareholder policies and for criminal and unethical business practices, such as bribery, corruption, money laundering, financial misinformation, ceation of cartels or fraud.

for the definition of the investment screens) and 6 techniques (see Appendix C,

Table A3. Definition of Investment Techniques.

Technique	Definition
Exclusion	This code will be used for every information that refers to practices where the fund companies use some negative screening, avoidance or exclusion of either business practices or even whole business sectors.
Positive Approaches	This code will be used for every information that refers to practices where the fund companies use positive screening or best-in-class approach. It is also used for every other ranking, such as best-in-industry or worst-in-class.
Shareholder Activism	This code will be used for every information that refers to practices where the fund companies influence the portfolio companies—either through dialogue (voice) or an explicit ESG-Voting-Policy (Voice). This code is only used if the engagement is done alone. If it is done with other investors, the code “Collaborative Engagement” should be used. This code is only used if the engagement is done alone. If it is done with other investors, the code “Collaborative Engagement” should be used.
First Engagement, then Divestment	This code will be used for information on how a company deals with controversies, e.g., if a portfolio company is involved into a scandal, if the portfolio company in an engagement process doesn’t change or if the ESG scores of a portfolio company drops below a defined threshold. If the company does seek the contact to or starts a dialog with the portfolio company, this code is applied. It is possible, that a divestment is the last option—but there must always be some sort of communication before the divestment. This code is NOT used if there is no contact or engagement initiative and the stock is directly sold. It is also not used, if it’s a one-way communication, e.g., just a letter to say goodbye without allowing the portfolio company to react.
Divest without Engagement	This code will be used for information on how a company deals with controversies, e.g,. if a portfolio company is involved into a scandal, or if the ESG scores of a portfolio company drops below a defined threshold. If the company does NOT seek the contact to or starts a dialog with the portfolio company, but instead sells its investment, this code is applied. This code is also used, if the divestment is no must, but a can and it doesn’t matter if it happens immediate or after a grace period. The important part is, that there is no communication before the divestment. This code is NOT used if there is contact or engagement initiative before the stock is sold. However, if the communication is just a one-way communication, e.g., just a letter to say goodbye without allowing the portfolio company to react, it still is part of this category.
Collaborative Engagement	This code will be used for every information that refers to practices where the fund companies influence the portfolio companies—either through dialogue (voice) or an explicit ESG-Voting-Policy (Voice). This code is only used if the engagement is done with other investors. If it is done alone, the code “Shareholder Activism” should be used.
Stigmatization	This code will be used if a fund company publicly expresses its disagreement towards actions of its portfolio companies. If concerns are expressed in private as part of a shareholder dialogue, this code is NOT used.
Impact claim	This code will be used for any statement, that investing with the fund will positively impact environment and society. The understanding goes beyond the personal dimension of the investor. If a company practices shareholder engagement, it is important, that the fund company clearly states, that it actively influences the portfolio companies—just stating that this might be possible or an engagement without clear impact goal is not sufficient. This code is NOT used, if the focus is just on the investors conscious.
Integrity claim	This code will be used for any statement, that investing with the fund will not violate or contribute to a good conscious. Important is the personal dimension of the investor—and not a doctrine of a church, a sustainability agenda, or the Christian faith in general.

for the definition of the investment techniques) as the most relevant aspects. In a second round of analysis, we used this category system to quantify our results and for cross-country and cross-denominational comparisons.

To validate our category system, two independent research assistants each coded a random sample of around 10% of the coded segments. We followed the approach of Kolbe and Burnett (1991) and thus did not include either of them in the development of the category system to achieve the best possible external objectivity.

We selected Fleiss’ kappa as a statistical measure for the reliability of agreement and obtained a value of 0.841 which is an almost perfect level of agreement and indicates very high confidence in the category system (Landis and Koch 1977). After the assistants coded the segments, we discussed the results with them to eliminate weaknesses in the category system, paying particular attention to the segments with conflicting results (Campbell et al. 2013).

4. Results

4.1. Investment Screens

In this section, we examine what the investment screens look like but also outline the reasoning for those screens.

Table 2. Summary of the topics of concern for CIF providers.

Investment Screen	Percentage of CIF Providers That Screen on This Topic
Environment
Environmental Destruction	84%
Climate Change	80%
Genetic Engineering	51%
Nuclear Power	49%
Animal Treatment	44%
Social
Human Rights	93%
Weapons	89%
Pornography	87%
Tobacco	87%
Embryonic Stem Cells	76%
Alcohol	76%
Gambling	76%
Abortion	71%
Contraception	44%
Governance
Governance Issues	87%

presents a summary of the 15 most important topics of concern for the CIF providers around the world and the frequency for different criteria.3

Usually, the CIF providers apply a combination of various types of ESG screens. The screening intensity is quite high, with around two-thirds of the providers applying more than ten screens, while only 7% using five or less screens. There is great homogeneity in the choice of topics of concern: the same ten categories are relevant to more than 75% of CIF providers. The most important topics are human rights, weapons, pornography, tobacco, and governance issues—while contraception, animal treatment, and nuclear power are the least important. The common normative basis of the biblical scriptures therefore clearly has a unifying effect on the topic selection despite many theological differences outside the investment world.

The reasoning that the CIF providers give for their screens is not always theological. Of course, some CIF providers base their screens solely on religious convictions, but others also include social aspects in the decision making. Examples of the former are especially in the area of sexual morality, i.e., abortion and pornography, or the environmental screens for environmental destruction and climate change. Examples for the social aspects are gambling, tobacco, or alcohol.

The biblical basis for rejecting abortion is the belief that human life starts with conception4, and therefore the unborn life must be protected (Boasson et al. 2006). The principle of screening out pornography is based on the belief that immoral sexual behavior can start with what you see and think. Jesus states: ‘‘but I say to you that everyone who looks at a woman with lust for her has already committed adultery with her in his heart” (New American Standard Bible 1995, Matthew 5:28). Further, pornography degrades the people involved to objects and thus deprives them of their God-given dignity (Dion 2009). The environmental screens can be derived from the concept of environmental stewardship (Cui et al. 2015), which in practice means caring not only for one’s own life but also for the well-being of neighbors and future generations. Some of the fund providers, especially in the U.S.A., even advertise their investment approach by quoting biblical scriptures.

But not every CIF provider has its screens directly developed from biblical scriptures. Rather common is referring to writings that provide an interpretation of scriptures and give guidelines for faith-consistent investing. Such guidelines include, for example, the “socially responsible investment guidelines for the United States Conference of Catholic Bishops” (USCCB), Investing Guidelines of the (Catholic) Austrian Bishop’s Conference, and dedicated guidelines from the Protestant and Catholic Churches in Europe. The USCCB, for example, specifies that they will not invest in companies that discriminate in hiring and promotion or that are involved in human cloning, and that they will work to change the policies of corporations that run sweatshops. Additional resources for defining a “Christian” investment strategy cover the encyclical letters of the different popes. For example, in “Laudato Si’” Pope Francis emphasized the importance of protecting the environment (Francis 2015). Earlier on, Pope Benedict XVI. in his “Caritas in Veritate” emphasized the importance of corporations and the potential role of corporate social responsibility (CSR) for global business ethics (Grassl and Habisch 2011).

Another source of justification for the applied screens is the effects of certain activities on society. Examples include gambling, tobacco, and alcohol due to the high social costs (Grinols 2011; Hofmarcher et al. 2020), serious health issues (Centers for Disease Control and Prevention 2021), and the risk for public transport (Centers for Disease Control and Prevention 2020). Interestingly, de Bruin (2013) points out that in the case of the alcohol industry the only valid reason for exclusion would still be a religious argument. A more recent secular influence factor for CIF providers is the Sustainable Development Goals (SDGs). In 2015, the United Nations launched the SDGs to address global challenges such as climate change, poverty, and undernutrition. Today, they can be perceived as a global sustainability agenda and many CIF providers refer to them in the selection of their portfolio firms.5

A few specialities must be noted in comparing the different groups. The regional distribution is strongly in favor of Europe, with 73% of the CIF providers being located on the continent. The most important topics for European CIF providers are human rights, tobacco, weapons, governance issues, environmental destruction, and climate change—while U.S. CIF providers screen mostly for abortion, pornography, and human rights.

Table 3. Comparison of relevant topics of concern for CIF providers in Europe and the United States.

Investment Screen	Europe (73%)	USA (27%)
Environment
Environmental Destruction	97%	50%
Climate Change	97%	33%
Genetic Engineering	70%	0%
Nuclear Power	64%	8%
Animal Treatment	58%	8%
Social
Human Rights	100%	75%
Weapons	100%	58%
Tobacco	97%	58%
Governance
Governance Issues	97%	58%

presents the topics with the largest differences between European CIF providers and their U.S. counterparts.

When looking at the country level, we noticed that CIF providers from the same country often apply screens that are very similar. Austrian CIF providers, for example, have 100% identical screening criteria, and a high level of homogeneity can also be found within French or within Spanish CIF providers. Those countries all have Catholic CIF providers only, which one may take as a reason for their homogeneity. However, in Germany, where both Catholic and Protestant fund providers are operating, a similarly remarkable overlap of 80% exists. If denominational characteristics were the only determining parameter, then theological differences should have produced much stronger differences here. We therefore assume that dominant public opinions concerning certain topics influence the applied screens across denominations.

This becomes even more evident when we analyze specific topics. For example, 100% of the German and Austrian CIF providers exclude nuclear power—while none of the French CIF providers does so. Other country differences can be found when looking at topics such as genetic engineering or animal rights, both important topics in Germany and Austria but not very relevant in Spain or France. The background here includes strong civic movements opposing nuclear power as well as genetic engineering and the fight for animal rights—with strong repercussions in the political arena of the respective countries (Rucht 2008). Another screen showing much variation between countries is the topic of climate change. While almost every CIF provider from Europe possesses it, only half of the U.S. CIF providers do so. This could be due to the circumstance that in the U.S. public debate this topic is by far less salient than in Europe (Leiserowitz et al. 2019).

Finally, an issue that most clearly reflects the importance of political and cultural debates on the CIF providers’ screening policies is the subject of weapons. While the anti-weapon screen is among the most prominent ones for the European CIF providers, roughly half of the U.S. CIF providers do not have it at all. The controversial U.S. debate about forbidding the ownership of weapons is likewise reflected in the U.S. CIF providers: they oscillate between allowing the production of weapons to protect human life and their prohibition for reasons of peacekeeping.

From a theological perspective, arguments can be found to exclude nuclear power, weapons, and animal testing—but arguments can also be found to not exclude them. Since the Christian Bible has not been written as a manual for investment, there is simply a lot of room for interpretation concerning specific topics. As a result, social and political aspects are becoming important influencing factors in deciding how to position oneself on these issues, and differences are emerging between countries and regions. Our findings here are consistent with a previous study from Smith (1992) who pointed out that Christian churches try to balance social issues and religious values in their investment decisions.

In the next step, we also analyzed the differences and similarities between CIF providers from different Christian denominations. We identified nine different denominations, from Methodists to Baptists. However, as many of them find themselves subsumed under the label of Protestantism, a distinction was made here only between Catholics and Protestants.

Table 4. Comparison of relevant topics of concern for Catholic and Protestant CIF providers.

Investment Screen	Catholic	Protestant
Environment
Environmental Destruction	90%	67%
Climate Change	83%	67%
Social
Human Rights	97%	83%
Pornography	83%	92%
Contraception	62%	8%
Abortion	76%	58%
Embryonic Stem Cells	86%	42%
Alcohol	62%	100%
Gambling	69%	92%
Tobacco	79%	100%
Weapons	97%	67%
Governance
Governance Issues	90%	75%

shows the topics with the largest differences between Catholic and Protestant CIF providers. The top four screens for each denomination are highlighted in bold.

At 71%, the majority of CIF providers follow a Catholic investment approach. In contrast to the outwardly uniform appearance, Catholic investment approaches are internally as diverse as the Protestant ones. Only seven screens were similar for at least 80% of the Catholic CIF providers and only six for the Protestant CIF providers.

The diversity among Protestants can be explained by the absence of a central ecclesiastical magisterium and, as a result, different denominational approaches to the interpretation of the biblical text. Similar diversity among Catholic CIF providers is surprising, however, because the Catholic tradition has various accompanying and interpretative documents to the biblical text (for example, the catechisms), which limits the room for individual interpretation.

The diversity in both groups might thus be a hint that the borders do not run along denominational lines but rather along the progressive or conservative interpretation of the Christian Bible. An example would be the topic of contraception, with 62% of the Catholic CIF providers screening for this topic. It is a red flag for conservatives, especially in the Vatican, that build their opposition on the biblical order to be fruitful and multiply. The counterargument of more progressive investors who argue for contraception is a social one: The World Economic Forum (WEF) has calculated that a dollar spent on reproductive health services saves about $2.20 in pregnancy-related health care costs. Additionally, the later a woman chooses to have children, the more time she can spend in the workforce, which in turn promotes economic development in poor communities (Kanem 2018). Many Catholic charities and foundations, whose money is often invested in CIFs, are active in third-world countries; these activists find themselves confronted with the effects of a lack of contraceptives daily.

The most important topics for Catholic CIF providers are human rights, weapons, environmental destruction, and governance issues, while Protestant CIF providers screen especially for alcohol, tobacco, gambling, and pornography. Interestingly, the Catholic top screens align very well with topics addressed in encyclicals of different popes: John XXIII with the encyclical letter “Pacem in Terris” emphasized the promotion of peace and human rights (John 1963), John Paul II with the encyclical letter “Centesimus Annus” strengthened the importance of the dignity of the human individual (John 1991), and Pope Francis with the encyclical letter “Laudato Si’” called to protect the environment (Francis 2015).

When looking for denominational diversity in the screens, the strongest differences exist in two areas: Catholic CIF providers are much stricter in reproductive issues, i.e., abortion, contraception, and use of embryonic stem cells, while the topic of alcohol is much more relevant for Protestant CIF providers. A historical factor for the latter finding may lie in the fact that many Catholic religious congregations were for centuries involved in brewing beer, growing wine, distilling schnapps, which resulted in a much less negative perception of alcohol consumption. Moreover, wine represents the blood of Christ in the sacramental Eucharist practiced at least weekly in the Catholic tradition. In contrast, the Protestant work ethic perceives alcohol consumption as a distraction from the human vocation of self-perfection through successful professional engagement.

To sum up, two things become visible when looking at the investment screens: first, the applied screens seem to be very homogeneous overall, and, second, this homogeneity does not persist deeper into the comparison of regions and denominations.

4.2. Investment Techniques

In section two of this chapter, we analyze the ethical investment techniques of CIF providers. Considering the upcoming impact discussion (see, for example, Kölbel et al. 2020; Busch et al. 2021; Heeb et al. 2021; Diener and Habisch 2022; Diener 2022), we place special emphasis on the impact that investors can achieve with their respective techniques.

Table 5. Key techniques for an ethical investment strategy of a CIF provider.

Investment Techniques	Share of All CIF Providers
Exclusion	100%
Positive Approaches	78%
Shareholder Activism	64%
First Engagement, then Divestment	42%
Divest without Engagement	40%
Collaborative Engagement	29%
Stigmatization	16%

presents a summary of the six most widely used techniques.

The investment techniques to implement a Christian investment strategy are applied very heterogeneously by the CIF providers. Only for the implementation of screens (both positive and negative) and shareholder activism are the values above 50%. This suggests that while theology provides at least some guidance on the issues that should be considered in a Christian investment strategy, it leaves a great deal of flexibility as to how these issues should then be addressed. For example, the topic of human rights can be addressed from the position of avoiding exploitation and discrimination or the position of fostering companies that protect workers and their families. Another example would be climate change, which can mean avoiding investments in fossil fuels or fostering renewable energy and electric vehicles.

A common denominator among all CIF providers is the application of exclusionary screening, with 100% of CIF providers using this method. Durkheim ([1912] 2001) assumes that religious activity is centered around the perception of the secular and the sacred areas in life. Thus, there is a desire to stay away from anything that is perceived as defiling, and since exclusion is the most appropriate technique to achieve that, it is used (Peifer 2011). Historical reasons could be an alternative explanation for the widespread use of exclusion. Exclusion has been at the heart of CIFs from the very beginning; the Quaker movement, for example, avoided making profits from slavery (Kinder and Domini 1997), and the first mutual fund also followed the exclusion approach (Kreander et al. 2004). Moreover, pragmatic considerations could have an influence because according to Berry and Junkus (2013) exclusion simply demands less time and effort than consistent interaction with portfolio firms. From an impact perspective, one line of reasoning would be to affect positive change by raising the cost of capital. An alternative justification would be that one avoids at least negative impact by not supporting undesirable business activities (Peifer 2011). The empirical evidence on the effectiveness of exclusionary techniques is ambiguous: while Slager and Chapple (2015) and Derwall et al. (2011) both observe that exclusion impacts firm behavior, Häßler and Markmiller (2013) and Richardson (2009) find no significant influence. Clementino and Perkins (2020) even find that institutional pressure in some cases prompts firms to react in a negative way.

Positive approaches are also widely used amongst CIF providers, with 78% applying this method. We assume that this widespread use can be explained historically as well, as this method is a natural progression of exclusion. This technique can be implemented as positive screenings or as best-in-class investments. Different from exclusions, positive approaches promote companies that contribute positively to sustainable development, thus going beyond a mere “Do-not-harm” focus. This is achieved by raising share prices and lowering financing costs to foster and support socially responsible behavior (Diener and Habisch 2022). Baker et al. (2018) and Zerbib (2019) document the success of this technique in the case of corporate debt, while Clementino and Perkins (2020) and Slager and Chapple (2015) demonstrate the success for equities. Moreover, Dimson et al. (2015) show that this technique also generates a positive return for investors.

CIF providers also invest in objectionable companies with the goal of using their influence as investors to change corporate behavior. An example would be investing in the stock of one of the oil majors and filing shareholder resolutions to put pressure on the company to reduce its carbon emissions. This technique is referred to as “Shareholder Activism” and 64% of the CIF providers employ it, which makes it the third most important technique. It can take various forms; the most common are ESG dialogue, shareholder proposals, and proxy voting, with the latter being the most applied form (Louche 2015). The high prevalence of shareholder activism among CIF providers is consistent with the findings of other studies. For example, Proffitt and Spicer (2006) discovered that over 50% of all shareholder proposals in the U.S. were filed or supported by religious institutional investors—despite relatively low levels of share ownership. A more recent study by US SIF (2018) supports these findings: despite a small 2.6% share of all sustainably managed assets, religious investors account for more than one-third (33.8%) of all ESG shareholder proposals. One possible explanation for the frequent use of shareholder activism is the attitude many CIF providers have of investing not only for economic reasons but also for political reasons, i.e., to spread their beliefs (Goodman et al. 2014). In addition, the circumstance that on the client side there is both a high level of confidence in the success of (van Cranenburgh et al. 2010) and a growing demand for (Wins and Zwergel 2016; Bauer et al. 2019; Barber et al. 2021) sustainable investment solutions incorporating this technique could also explain its prevalence. Both Dimson et al. (2015) and Gifford (2010) explore the effects of ESG dialogue and rank it as a useful instrument for improving corporate sustainability performance. In addition, Dyck et al. (2019), Barko et al. (2022) and Hoepner et al. (2022) examine the impact of shareholder resolutions, and all conclude that they are a useful tool to bring about change in companies.

One technique used either in combination with shareholder activism as the final step in an engagement process (40%) or without further engagement as an instant reaction to negative sustainability developments (42%) is divestment. This is arguably an aggressive form of exclusion, as it not only excludes a company’s shares from future purchases but also purges the portfolio of existing positions (Dawkins 2018). According to a theoretic model by Luo and Balvers (2017), the threat of divestment leads the market to charge a premium for companies involved in controversial business activities. In another theoretical examination, Dawkins (2018) argues that linking divestment with engagement can become a powerful lever for the success of an investor campaign. However, these theoretical considerations are not supported by empirical studies so far: the Sudan Accountability and Divestment Act (SADA), a divestment campaign from the U.S., had no overall impact on the financial situation of targeted companies (GAO 2010), and Teoh et al. (1999) found similar results for the divestment efforts against the apartheid system in South Africa.

Less frequent, but still very important for CIF providers, is the technique of collaborative engagement. Around one-third (29%) apply this method. Investors are forming alliances here, for example, to promote human rights or to combat climate change, thus pooling their influence (Dyck et al. 2019; Chen et al. 2020). This may be accomplished through direct partnerships between investors with converging ESG policies or through engagement platforms such as the PRI Clearinghouse (Diener and Habisch 2022). The applied mechanisms are the same as for singular shareholder activism, i.e., ESG dialogue, shareholder proposals, or proxy voting, but the larger share ownership and coordination increase the likelihood of success. One recent example is the successful campaign by sustainability-focused hedge fund Engine No. 1 to change Exxon Mobil’s board of directors to accelerate the company’s sustainability transition (Hiller and Herbst-Bayliss 2021). This form of engagement is very effective, argue Dimson et al. (2013) and Dimson et al. (2018), as it increases shareholder influence without creating an under-diversified portfolio. Explanations for why this method is not more widely used include a perceived competition for customers which hinders cooperation, the fact that all CIF providers started with screening and some may have not changed this strategic approach ever since, or that it is simply unknown how effective this technique is. With a growing awareness for engagement and with networks for engagement starting to form within the CIF community (for example, the Shareholders for Change network6 or the collaborative engagement efforts of the ICCR7), we expect those numbers to rise in the future.

The final technique, and the technique with the lowest use (16%), is stigmatization. Investors here publicly discredit a firm’s reputation, e.g., through media campaigns, to increase the capital costs and to generate public pressure to alter their “unethical” business practices. However, this instrument can also be used as legitimation of the sale of a share (Diener and Habisch 2022). A possible explanation for the low usage of this technique is that Christian organizations invest with a long-term perspective (van Cranenburgh et al. 2014) and a public confrontation damages partnerships and relationships built on trust. Research on this topic is sparse, but we do find some circumstantial indications of efficacy in related fields. First, King and Soule (2007) found that social movements succeeded in influencing the share price of a company against which they were running a campaign. In their study, however, they did not examine whether the price movements then also resulted in improvements in the respective companies. Second, Markman et al. (2016) show that a media campaign by the nongovernmental organization (NGO) “People for the Ethical Treatment” (PETA) was a success and terminated the practice of sheep mulesing. Third, Waldron et al. (2014) find on the one hand successful stigmatization, e.g., by the Rainforest Action Network (RAN), but on the other hand also failed stigmatization, e.g., by Greenpeace. Finally, Waldron et al. (2019) note that GLAAD and Oxfam’s campaigns succeeded, while PETA and Friends of the Earth did not.

Overall, our findings are consistent with previous studies by Louche et al. (2012) and Adams and Ahmed (2013), who both find exclusion to be a preferred investment technique of Christian investors. Interestingly, two techniques, namely, positive approaches and shareholder activism, which are considered in the literature to be very effective in influencing corporate behavior, are also widely used.

4.3. Public Presentation of the Non-Financial Investment Objectives

The final aspect we analyzed was the public presentation of CIF providers’ non-financial investment objectives. Based on this criterion, our sample can be divided, albeit very roughly, into two generic groups: on the one hand, those that favored screening only and emphasized purity claims very strongly, and, on the other hand, those that complemented exclusion with positive approaches and shareholder activism and built their marketing around a change perspective. The former corresponds to Weber’s ([1922] 1978) characterization of value-rational behavior, which “[seeks] the value for its own sake … regardless of its prospects of success” (Weber [1922] 1978, pp. 24–25). The latter resembles Weber’s ([1922] 1978) instrumental orientation, where “the ends, the means, and the secondary results are rationally considered” (Weber [1922] 1978, p. 26), and this group accounts for 68% of the CIF providers.

In the case of purity-focused CIF providers, the primary concern is to steer clear of all business activities that are “unethical”. Active influence on the portfolio firms has, if considered at all, a lower priority. They target clients for whom a “clear conscience” is most important when investing their money.

Enjoy peace of mind knowing that you have invested with integrity.

(fund provider from the USA)

Purity-focused CIF providers see avoiding unethical companies as the best approach to making morally sound investments. They assume that refusing to support them already constitutes responsible conduct (Peifer 2011) and consequently condemn applying thresholds as an acceptable compromise compared to a zero-tolerance policy. They also state that they review their portfolios more thoroughly and thus examine both the portfolio companies and their suppliers and subsidiaries. Purity-focused CIF providers constantly audit how well their portfolio companies comply with their definition of an “ethical” enterprise. To do so, they utilize screening service firms such as ISS ESG or MSCI ESG Research, but they also have their own analytical tools to verify whether accusations are well founded. This costly double-checking can be attributed to fears that scandals could be linked to the CIF provider, thus undermining its credibility (Husson-Traore and Meller 2013) and harming future business prospects.

At the other end of the scale are those CIF providers that manage their portfolios from a more change-oriented perspective, promising that their investments will have a positive impact on the environment and society. To emphasize the impact orientation, the product of one CIF provider was specifically rebranded as “Global Impact Fund”. Impact-focused CIF providers try to differentiate themselves from their competitors by targeting customers who want to contribute to the improvement of sustainability indicators.

The Fund is governed by the philosophy that being faithful stewards means using assets God has entrusted to us to promote economic results that are not only productive but also reflect God’s values, caring for others as well as all of Creation.

(fund provider from the USA)

Impact-focused CIF providers also employ exclusions, but the goal here is to mitigate negative impacts, and the portfolio companies’ attempts to reduce such impacts are factored into the assessment. However, the favored method of building a moral portfolio is to buy shares of ‘unethical’ enterprises and then practice shareholder activism. Here, impact-oriented CIF providers use a variety of methods: participating in ESG dialogues, voting for shareholder proposals that tackle sustainability topics, and filing their own proposals. Often, these activities are conducted with other like-minded investors in collaborative engagement partnerships.

Those two groups resemble two different approaches for dealing with the world from biblical times. Purity-focused CIF providers are like the Essenes, an end-time group that separated itself from its social environment and withdrew into a pure and holy counter-world. Impact-focused CIF providers have much in common with the Jesus community, which from its very beginning has taken a totally different stance. Jesus did not withdraw like a hermit but reached out to his people and also sought open confrontation with the authorities to address political and social issues. Through his public resistance against the mainstream religious and economic practices, he strove towards not replacing but converting and saving the people of God as a whole. Hence, the Jesus community understands itself as being entrusted with a mandate to promote change, which is very much the approach of impact-focused CIF providers.

The sketched duopoly of impact perspectives is of course a very broad distinction, but it outlines the spectrum of different impact perspectives that exist. Nevertheless, it is interesting to note that there is a clear preference for claiming a positive impact on the sustainability performance of portfolio companies.

5. Discussion and Conclusions

The goal of this exploratory study was to provide more foundational knowledge about what ethical investing looks like from a Christian perspective. We find that no such thing as “Christian investing” exists, as investment screens, investment techniques, and the public presentation of non-financial investment objectives vary substantially among CIF providers. What many of them have in common, however, is the intention to improve the sustainability performance of their portfolio companies.

Our results are consistent with previous studies in this field. Louche et al. (2012) examined the investment behavior of 100—mostly Christian—institutional investors. They confirm our findings that the top three investment techniques are exclusion (87%), positive approaches (79%), and shareholder activism (88%). They also confirm that investing differs strongly between regions, which supports our suggestion that social and political aspects are important factors for the choice of investment screens. In addition, our findings confirm Adams and Ahmed’s (2013) thesis that Christian investors prefer to practice exclusion. Finally, the documented intention of most CIF providers to positively influence the environment and society coincides with the behavior of many Christian investors. They have a long history of using their financial influence to achieve social and environmental improvements, for example, in the fight against the apartheid regime (Teoh et al. 1999), in addressing the climate crisis (ICCR 2015), or in achieving the UN Sustainable Development Goals (Palmer and Moss 2017).

The results of this study are subject to certain limitations. First, due to the sample size and the exploratory character, the results of this study provide only initial ideas to be confirmed by future studies. Second, certain providers simply did not disclose all the necessary information for a sound judgement of their investment policy. It may therefore be possible that some CIF providers in our sample follow a very sophisticated investment policy but decided not to disclose it. This is relatively unlikely, however, as the CIF providers should possess an intrinsic motivation to communicate their (often costly) efforts.

Our results raise many interesting research questions. First, the ethical investment policies of SRI providers and other religious groups need to be examined to compare them with our findings on CIF providers. Second, since we have concentrated on providers of publicly traded funds, it would be promising to also examine providers of privately traded funds or passive investment products, such as exchange-traded funds. Third, our data may serve as a basis for further quantitative analysis, e.g., on the performance of different CIFs and their diversification effects. For example, Naeem et al. (2021) demonstrate that Sukuk, an Islamic financial instrument, allows for low-risk investments and offers greater diversification opportunities.

It would be particularly interesting to determine whether the differences in the marketing material of focusing on purity or on impact lead to differences in performance. Here, Dimson et al. (2015) and Busch et al. (2016) provide evidence that impact-focused funds should have a long-term performance advantage. A further research topic would be what influence AUM and size have on the ethical investment policies of CIF providers. While larger funds have more resources and financial clout, smaller CIF providers need to be more innovative and flexible to succeed.

It will be interesting to see how faith-based investors are positioning themselves in the future. For example, the topics of weapons, climate change, and nuclear power are currently being reevaluated in the public debate, which could lead to changes in the screens of CIF providers. Further, with the EU taxonomy for sustainable finance and the Social Development Goals, two international frameworks are influencing the perception of sustainable investing. Finally, the upcoming impact discussion presents both opportunity and threat to CIF providers: those that have already aligned their investment policies will most likely benefit from increased asset flows, but those neglecting this development—and one could even argue, neglecting their divine mandate—are at risk of losing assets and influence.