Catholic Social Teaching and divestment

Catholic Social Teaching around caring for creation and for the marginalised, and its relationship with divestment

by Thea Ormerod

See Catholic Social Teaching Principles (1-pager for Catholic Charities)

The Church has recognised for many centuries the call to care for people on the margins of society as key to living out our Mission as followers of Christ.  The “preferential option for the poor” is a key driving principle within Catholic Social Teaching, and the desired goal is social justice. In recent decades, a body of teaching has also emerged which supports caring for the environmental systems that support life as an extension of this concern for justice. These are the teachings which inform considerations around how Catholics should invest.

Climate change as a social justice issue

Climate change is a question of social justice because it is vulnerable communities, mostly in the two-thirds world, which are being hit earliest and hardest by climate impacts such as sea level rise, extreme weather events and disruptions to the climate system. They have limited means with which to adapt or recover, and so experience destruction of their lives and livelihoods, food insecurity, dislocation and so on. They have not contributed to the ecological destruction for which they are paying the price. Similarly, a high price will be paid by future generations, even though they didn’t create the problem.

The mining and burning of fossil fuels also affects the health of disadvantaged communities more, as they are more likely to be living near the sources of pollution.

In the meantime, it is wealthy companies and individuals who benefit from the profits of fossil fuel intensive investments, while also living high consumption lifestyles which create disproportionate greenhouse gas emissions.

In response, many faithful Catholics are commendably responding by moderating their consumption and embracing sustainable technologies. However, without careful attention to the way their money is being invested, there is a strong possibility of unwittingly supporting the very practices they oppose.

Papal teaching prior to Laudato Si’

“Laudato Si’: on care for our common home” was the first papal encyclical entirely devoted to environmental issues. However, it drew from the previous writings of Bishops’ Conferences, pontiffs and others who advocated caring for the environment. Pope John Paul II often spoke on environmental concerns in his sermons and addresses, and wrote on the subject in various encyclicals. In the late 1980’s and 1990’s, he highlighted that care for the environment is a matter of a common and universal duty, that of respecting a common good,[1] destined for all. We should be preventing anyone from using “with impunity the different categories of beings, whether living or inanimate – animals, plants, the natural elements – simply as one wishes, according to one’s own economic needs.” [2]

Pope John Paul II taught that every economic activity making use of natural resources must also be concerned with safeguarding the environment and should foresee the costs involved, which are “an essential element of the actual cost of economic activity”.[3] The impact of human activity on the climate should be closely monitored, and that the climate is a good that must be protected. He reminded consumers and those engaged in industrial activity to develop a greater sense of responsibility for their behaviour. [4]

Pope John Paul II wrote that an economy respectful of the environment will not have the maximization of profits as its only objective, because environmental protection cannot be assured solely on the basis of financial calculations of costs and benefits. The environment is one of those goods that cannot be adequately safeguarded or promoted by market forces.[5]

In 2001, Pope John Paul II expressed concern over widespread misconceptions around humanity’s “dominion” over creation. He stated,“We must therefore encourage and support the ‘ecological conversion’ which in recent decades has made humanity more sensitive to the catastrophe to which it has been heading. Man is no longer the Creator's 'steward', but an autonomous despot, who is finally beginning to understand that he must stop at the edge of the abyss."

The urgency of the environmental crisis was clearly on the mind of Pope Benedict XVI when he said in 2007: "Before it is too late, it is necessary to make courageous decisions that reflect knowing how to re-create a strong alliance between man and the earth."

In his World Day of Peace address in 2010, Benedict XVI lamented the problems of climate change, the pollution of rivers and aquifers, the loss of biodiversity and so on. He encouraged the development of “forms of energy with lower impact on the environment”. He stated that “The Church has a responsibility towards creation, and she considers it her duty to exercise that responsibility in public life, in order to protect earth, water and air as gifts of God the Creator meant for everyone, and above all to save mankind from the danger of self-destruction.”

US Catholic Bishops’ investment principles


It was the US Catholic Bishops in the early 2000’s who explicitly made connections between Catholic Social Teaching and questions of ethical investment. From the Church’s teachings they gleaned certain core values which should guide economic decisions, and then agreed on certain principles to guide their investments. The core values were: [6]

§  Human Dignity - The economy exists to serve the human person, not the other way around.

§  Justice - The moral measure of any economy is how the weakest are faring.

§  Stewardship - We are stewards of God’s creation, which it is our responsibility to nurture, respect, preserve and protect for future generations.

§  Shared Prosperity - Wealth is a gift to be shared, and work must be fairly and justly rewarded.

§  Responsible Ownership - Ownership of capital should be used to promote corporate social responsibility and the common good.

§  Corporate Social Responsibility - Businesses must be responsible not only to their shareowners but to all stakeholders. These include employees, communities, the environment and the public.[7]

On the basis of these values, the US Catholic Bishops adopted investment policies which cover: protecting human life; promoting human dignity; reducing arms production; pursuing economic justice; protecting the environment, and encouraging corporate responsibility. As part of protecting the environment, they would encourage policies and businesses that "undertake reasonable and effective initiatives for energy conservation and the development of alternate renewable and clean energy resources ... [and offering] incentives to corporations to reduce greenhouse gas emissions and assistance to workers affected by those policies." [8]

Three potential strategies for investment were envisaged: (1) Screening out investments in certain kinds of economic activities, or divestment; (2) Where it may be possible to influence businesses to be more environmentally responsible, retaining investments with a view to engaging is shareholder advocacy; (3) Investing in companies or initiatives which produce significant social goods. In practice, Catholic investors in the US have seen shareholder engagement as more valid than divestment. This is now being questioned by advocates for fossil fuel divestment.

Laudato Si’

See https://churchpop.com/2015/06/18/26-key-quotes-from-pope-francis-encyclical-on-the-environment-laudato-si/

 “Laudato Si’: on care for our common home” is clearly of landmark significance.  Laudato Si’ explores the many dimensions of environmental destruction in our world but, as with all Catholic Social Teaching, the central concern is for justice. While global economic structures provide some with “super-development”, others live in dehumanising deprivation and are more vulnerable to the impacts of environmental destruction. His Holiness is also concerned for intergenerational justice, and the protection of the diversity of life forms with which we share the earth.

Laudato Si’ strongly encourages a change of heart in everyone, at all levels of society and globally, to relinquish any narrow focus on immediate self-interest. It encourages an “integral ecology”, an approach to living which holds together our deep spiritual needs, relationships with others (especially the poor), connection with nature and love of God.

Global warming is a theme to which the encyclical returns repeatedly. Informed by the Vatican Academy of Sciences, Pope Francis wrote, “A very solid scientific consensus indicates that we are presently witnessing a disturbing warming of the climatic system,” and this is largely due to human activity. (para. 23) Moreover, “There is an urgent need to develop policies so that, in the next few years, the emission of carbon dioxide and other highly polluting gases can be drastically reduced, for example, substituting for fossil fuels and developing sources of renewable energy.” (26)

His Holiness is clear that we are dealing with a “crisis” and that action is “urgent”. He thus wrote, “Doomsday predictions can no longer be met with irony and disdain. We may well be leaving to coming generations, debris, desolation and filth.” (Para 161)

The burning of fossil fuels is particularly problematic: “We know that technology based on the use of highly polluting fossil fuels – especially coal, but also oil and, to a lesser degree, gas – needs to be progressively replaced without delay. …. Politics and business have been slow to react in a way commensurate with the urgency of the challenges facing our world.” (Para. 165)

Not only has business been “slow to react”, but Pope Francis alludes to the intentional distortion of information by fossil fuel industries with a view to influencing climate negotiations. “The failure of global summits on the environment make it plain that our politics are subject to technology and finance. There are too many special interests, and economic interests easily end up trumping the common good and manipulating information so that their own plans will not be affected.” (Para. 54)

He is critical of the “mindset of short-term gain” (para. 181) and “those who are obsessed with maximizing profits” and who fail “to reflect on the environmental damage which they will leave behind for future generations.” (Para 190) Conversely, Pope Francis praises citizens groups and non-government organisations who advocate for environmental care. He affirms consumer boycotts which “prove successful in changing the way businesses operate, forcing them to consider their environmental footprint and their patterns of production. When social pressure affects their earnings, businesses clearly have to find ways to produce differently…. ‘Purchasing is always a moral – and not simply an economic – act.’” (Para.  206) 

On the question of alternative and ethical investment, “Efforts to promote a sustainable use of natural resources are not a waste of money, but rather an investment capable of providing other economic benefits in the medium term. If we look at the larger picture, we can see that more diversified and innovative forms of production which impact less on the environment can prove very profitable. It is a matter of openness to different possibilities which do not involve stifling human creativity and its ideals of progress, but rather directing that energy along new channels.” (Para. 191)

In Pope Francis’ encyclical he does not explicitly address questions of ethical investment, but certain conclusions can reasonably be drawn from numerous teachings in the encyclical. They form a solid basis for proposing that both fossil fuel divestment and low-carbon investment are the most ethical options for those with money to invest.


Thea Ormerod is a practising Catholic, a long time social justice advocate and is currently President of the Australian Religious Response to Climate Change. ARRCC has been encouraging people of faith and faith-based organisations to go fossil free since April, 2013.


[1] Cf. John Paul II, Encyclical Letter Centesimus Annus, 40: AAS 83 (1991), 843.

[2] John Paul II, Encyclical Letter Sollicitudo Rei Socialis, 34: AAS 80 (1988), 559.

[3] John Paul II, Address to the Twenty-Fifth General Conference of FAO (16 November 1989), 8: AAS 82 (1990), 673.

[4] Cf. John Paul II, Address to a study group of the Pontifical Academy of Sciences (6 November 1987): Insegnamenti di Giovanni Paolo II, X, 3 (1987), 1018-1020.

[5] Cf. John Paul II, Encyclical Letter Centesimus Annus, 40: AAS 83 (1991), 843.

Footnotes 1-5 are taken from the Compendium of the Social Doctrine of the Church, Pontifical Council for Justice and Peace, 2004, Chapter Ten, Safeguarding the Environment, Part IV A Common Responsibility, pages 235-8. 

[6] These are based on the US Conference of Catholic Bishops Socially Responsible Investment Guidelines


[7] See also Gregory R. Beabout & Kevin E. Schmiesing, “Socially Responsible Investing: An Application of Catholic Social Teaching,” in Logos 6: 1 Winter 2003. 

[8] http://www.usccb.org/about/financial-reporting/socially-responsible-investment-guidelines.cfm