When people learn that I’m an economist, they sometimes assume that I must therefore be an expert at picking stocks. As I have to explain whenever this happens, going to graduate school to study economics doesn’t necessarily give one much in the way of practical knowledge about investing—in part because doing so can lead you to spend half a decade or more without any money to invest.
In fact, now that I’m no longer a student and have risen above a subsistence level of income, I actually find it quite daunting to figure out where I should park my savings. There is an overwhelming array of options for investing even small amounts of money in the era of online trading platforms, but the real challenge is to find opportunities to put your spare cash to work that don’t contribute to making the world a worse place.
The problem is not simply that many corporations or governments whose stocks or bonds trade on public markets are themselves directly responsible for serious evils, such as war, genocide, environmental degradation, or labor exploitation. It’s also that, because of the interconnectedness of the modern global economy, even companies or states that are not overtly malevolent are often indirectly complicit in various kinds of bad behavior. Awareness of this fact has motivated, for instance, calls for college and university endowments, union pension funds, and other large pools of institutional capital to divest from controversial industries like fossil-fuel production or arms manufacturing. But practicing “socially responsible investment” (SRI) can involve difficult judgment calls, in particular about what constitutes an unacceptable level of entanglement with antisocial business practices.
The question of how—or even whether—investment can be undertaken in an ethical manner has been pondered by philosophers and theologians of many different stripes. For its part, the Catholic Church has long recognized, as Pope John Paul II put it in his 1991 encyclical Centesimus annus, that “the decision to invest in one place rather than another…is always a moral [one].” The U.S. Conference of Catholic Bishops (USCCB) has published its own SRI guidelines based on principles from Catholic social thought, as have other national bishops’ conferences around the world. Numerous Catholic schools, men’s and women’s religious orders, and Church-affiliated organizations have likewise developed detailed frameworks for both governing their own investments and fostering more widespread reflection about the ethics of finance.
But applying abstract guidelines to concrete dilemmas, such as whether a Catholic university should divest its endowment funds from a given corporation involved in, say, transgressions of international law, is not always straightforward. The USCCB’s SRI document, for example, recommends “refusal to invest in companies whose products and/or policies are counter to the values of Catholic moral teaching.” Yet it goes on to encourage “initiating or supporting shareholder resolutions…to support or raise objections to a corporation’s activities or policies.” So how exactly do we determine when a company’s products or policies are objectionable enough that a categorical “refusal to invest,” rather than an attempt to “initiate or support shareholder resolutions,” is the right course of action?
A new initiative led by the Istituto per le Opere di Religione (IOR)—the Institute for the Works of Religion, or, more colloquially, the “Vatican Bank”—could, at least in theory, make it easier for Catholics to become morally serious investors. In February 2026, the IOR announced the launch of a new pair of investment indexes jointly developed with the research firm Morningstar that are “designed to serve as a reference for Catholic investments worldwide.”
These twin “equity benchmarks,” known officially as the Morningstar IOR Eurozone Catholic Principles and Morningstar IOR US Catholic Principles indexes, are collections of stocks issued by medium- and large-cap companies based, respectively, in the European Union and the United States. According to the IOR, both were assembled “following market best practices and in accordance with Catholic ethical criteria,” which encompass “the Sanctity of human life, respect for human life, environmental protection, and combating addictions,” as well as “social responsibility and sustainability.”
The specific equities incorporated into both indexes can change periodically, and complete lists have not been made publicly available. But after seeing reports on the top holdings in each index, both when they were initially released in February and in May, I’m worried that this whole exercise could end up doing more harm than good.
Among the companies whose stocks have been featured in the U.S. index are household names that have shown little regard for the IOR’s stated ethical priorities. These include Apple (long accused of various forms of worker exploitation both in the United States and along its global supply chain), JPMorgan Chase (by some measures the leading financier of fossil-fuel projects in the world), Meta (recently found liable by a jury for causing social-media addictions), NVIDIA (currently under scrutiny in several different countries for alleged antitrust violations), and Tesla (penalized by multiple U.S. government agencies for undermining union organizing and maintaining unsafe workplaces). The roster for the EU index also contains few paragons of corporate virtue.
Some might object that I’m being too hard on the IOR here. After all, you can find dirt on any company out there if you do enough digging. Attempting to invest only in those that have never done anything morally problematic would, in practical terms, lead one to stop investing altogether. And stowing your money under a mattress is no solution, either: in response to the idea of throwing up our hands and withdrawing from the financial system entirely, the Dominican theologian and economist Fr. Albino Barrera has argued that “besides being impractical, it is not morally right…because of the societal opportunity cost…. Hoarding such funds [that could be used for investment] raises the cost of capital for everyone.”
Perhaps the best we can aim for, then, is “harm reduction.” The IOR indexes do screen out companies that are directly involved in certain practices that the Church opposes, such as abortion, embryonic stem-cell research, and the production of chemical weapons and cluster munitions. But even if we grant that no company will fully embody Catholic teaching on every issue, and that all we can do is steer clear of those that are the most obviously out of sync with the Church’s moral and social teachings, there is a real risk that the indexes will end up being interpreted as de facto endorsements of particular companies. Indeed, some media coverage of the benchmarks has already characterized them as comprising “stocks aligned with Catholic values.”
Although it is heartening to see the IOR using its platform to spark a broader conversation about the ethical implications of investing—including in the secular financial press—the selection criteria for the indexes seem likely to reinforce a perception that the Catholic Church really only cares about a limited set of moral issues. What message does it send that involvement in embryonic stem-cell research may get you screened out, but funding the construction of fossil-fuel infrastructure evidently does not? In this regard, the IOR’s approach is marked by some of the same weaknesses as previous efforts to promote “Catholic-friendly” investing, such as the work of the U.S.-based Ave Maria Mutual Funds, that have gone even further in the direction of elevating bioethical concerns above all others.
Moreover, the future plans for these indexes remain somewhat murky. Their precise composition appears to be proprietary information, and some observershave speculated that the IOR may be hoping to charge other Catholic institutions or investment firms licensing fees for use of the benchmarks. That could certainly be lucrative for the Vatican, but it would also dramatically limit the value of these indexes as a resource for Catholic investors generally.
If a primary audience here is Catholic entities with sizable investment portfolios, then there is yet another sense in which this project represents a missed opportunity. By suggesting that ethical investment consists merely in picking and choosing from the set of investments already on offer in the marketplace, it ignores the incredible potential for using institutional capital to catalyze systemic economic change.
While many Catholic colleges and universities in the United States face existential budgetary challenges, a handful of schools like Notre Dame, Boston College, and Georgetown are sitting on endowments valued in the billions of dollars. What might be possible if even a portion of those funds could be diverted away from Apple or NVIDIA stock, and instead used to finance the creation of more worker-owned cooperatives, capitalize zero-interest loan funds, or support the transition to renewable energy? Innovative approaches like that of Mercy Investment Services, the asset manager for the Sisters of Mercy and a proponent of the concept of “impact investing,” show that such ideas are by no means pie-in-the-sky.
In its 1971 document “Justice in the World,” the Synod of Bishops eloquently declared that
in regard to temporal possessions, whatever be their use, it must never happen that the evangelical witness which the Church is required to give becomes ambiguous…. We must certainly keep firmly to this principle: our faith demands of us a certain sparingness in use, and the Church is obliged to live and administer its own goods in such a way that the Gospel is proclaimed to the poor. If instead the Church appears to be among the rich and the powerful of this world its credibility is diminished.
The IOR should be applauded for taking steps to more fully embrace “market best practices,” especially in light of the many financial scandals that have plagued the Vatican Bank in the past. Insofar as partnerships with private firms such as Morningstar help advance that objective, they are clearly net positives for the Church.
At the same time, the IOR has to ensure that its collaborations with the world of secular finance don’t lead to exactly the kind of loss of credibility that the Synod of Bishops warned about more than fifty years ago. And when the pope is speaking out about the potentially dire consequences of unchecked carbon emissions, advances in artificial intelligence, and ever-greater concentrations of income and wealth, one has to ask whether putting what looks like a Vatican stamp of approval on the likes of JPMorgan, Meta, and Tesla will make his warnings less compelling.
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