Corporate Social Responsibility (CSR) emerged in the twentieth century, yet its origins are deeply rooted in Christian history and the longstanding philosophical debates of secular and religious thinkers that predated modern corporations.
Shareholders bear a duty to their families, communities, and God by using their financial resources for good. This transforms investing into both a moral obligation and a fiduciary responsibility. Shareholders must actively hold boards of directors and executives accountable through diligent investment screening, voting proxies, and robust shareholder engagement. They are also entrusted with promoting accountability, transparency, and the well-being of all stakeholders within the firm.
Today, CSR—also known as corporate citizenship—is a self-regulated business model founded on "doing well by doing good." It aims to achieve societal benefits beyond what is mandated by law.
Within the realm of CSR, important subsets exist, such as faith-based investing (FBI) and Catholic social teaching (CST). These concepts provide a historical foundation for CSR within economic frameworks.
Faith-based investing integrates Christian values into investment decisions, encompassing investment screening, active shareholder involvement, and contributions to community welfare. This approach requires Christian investors to uphold fiduciary responsibilities towards their families, communities, and faith by utilizing finances for positive impact.
A critical question arises: Can Christian values align with achieving risk-adjusted returns equal to or better than the market index?
Catholic Social Teaching derives its principles from the teachings of the Catholic Church, rooted in Holy Scripture and theological discourse. Pope John Paul emphasized, “The Church’s Social Teaching is rooted in Sacred Scripture, especially in the Gospel and the writings of the Apostles. It has been integral to the Church’s teachings from the beginning.”
Drawing from 1 Corinthians 12:12-26, believers are likened to a unified body, stressing mutual care and respect among members ("For as the body is one and has many members, and all the members of that one body, being many, are one body, so also is Christ"). This analogy underscores the importance of treating others as integral parts of a shared spiritual community.
Pope Leo XIII (1810-1903), known as the “Pope of Peace,” authored "Libertas" (1888) on liberalism, democracy, and freedom of conscience and "Rerum Novarum" (1891) on the rights and responsibilities of capital and labor, laying the groundwork for Catholic Social Teaching (CST) on social justice. CST has inspired initiatives such as faith-based investing, CSR, socially responsible investing (SRI), people, planet, and profits (PPP), and environmental, social, and corporate governance (ESG).
While Leo XIII initiated CST, subsequent clergy members have advocated for human dignity across all facets of Christian life. "Pacem in Terris" (Peace on Earth) affirms the rights to life, liberty, and the pursuit of happiness, asserting the natural right to improve one’s life and the collective responsibility to enhance societal welfare.
Leo XIII emphasized that communities thrive when the impoverished rise above poverty. This translates into ensuring provisions such as an inflation-protected minimum wage, fair compensation, healthcare access, and retirement savings.
Amy Domini, founder of Domini Social Investments and the Domini 400 Social Index (now FTSE KLD 400 Social Index), pioneered Socially Responsible Investing (SRI), a crucial component of CSR. Domini cites John Wesley, founder of Methodism, and Leo XIII as influences, with milestones including the Universal Declaration of Human Rights (1948), Civil Rights Acts (1960s), and Environmental Acts (1970s). Wesley aimed to revive moral virtues among his followers.
Wesley’s sermon "The Use of Money" cautioned against profiting at others' expense and addressed governance issues such as consumption, corruption, environmental stewardship, human rights, and usury.
Socially Responsible Investing (SRI) involves ethically screening investments, engaging with companies, shareholder activism, community investing, and social venture capital funding. Its core premise prioritizes ethical considerations over profits, with Socially Responsible Investors willing to accept lower returns by excluding "sin stocks."
SRI constitutes a vital subset of CSR, deeply rooted in Christian teachings. While Christianity significantly influences CSR and SRI, these principles also resonate within the histories of Judaism and Islam. The centuries-long journey of integrating these principles into modern corporate behavior reflects not only corporate greed but also an evolution towards more socially responsible practices inspired by religious teachings.
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