Guiding principles for governance in Catholic investing 

At the center of any successful approach, however, is strong governance, grounded in clear, consistent principles for the organization. Effective governance fosters alignment among diverse stakeholder groups, builds consensus around a shared vision for portfolio alignment, and is reinforced through sustained, thoughtful engagement.

In our previous blog, we highlighted the importance of embedding these principles within a cohesive Investment Policy Statement (IPS). The IPS should clearly reflect the organization’s Catholic identity and articulate the values that guide portfolio construction, manager selection, and oversight. A well-crafted IPS serves not simply as a policy document, but as a unifying framework that connects mission and investment strategy.

Strong governance recognizes that mission alignment and financial stewardship are not competing priorities but mutually reinforcing. The most effective programs tend to be guided by the following core principles. 

Putting a Catholic values-aligned investing roadmap into practice begins with cultivating the right governance mindset. Boards and leadership teams must establish clear guardrails that define the investment time horizon, target levels of compliance, exposure thresholds, and escalation processes that will guide decision-making over time.

Catholic values-aligned investing in the U.S. is guided by the U.S. Conference of Catholic Bishops’ Socially Responsible Investment Guidelines (USCCB SRIG) and, globally, by Mensuram Bonam.

These frameworks extend beyond exclusionary screens, emphasizing active corporate engagement and impact investing. Mensuram Bonam outlines three strategies, Call to Engage, Call to Enhance, and Call to Exclude, grounded in principles such as human dignity, the common good, solidarity, subsidiarity, care for creation, inclusion of the vulnerable, and integral ecology.

In practice, this may mean avoiding companies that violate human rights or harm natural resources. While no two investors' governance will look the same, these frameworks act as a core starting point for all Catholic values-aligned investors. Critically, the investment committee must prioritize long-term outcomes. Short-term market movements should not derail a strategy rooted in enduring principles. A durable, mission-grounded framework increases the likelihood that future committees will understand, support, and sustain the approach.

We work closely with committees to define these guardrails with precision and clarity, codifying them in ways that unify diverse stakeholder groups around a shared mission. When expectations are aligned at the outset, organizations can be better positioned to balance faith-based principles with prudent investment stewardship.

As organizations translate strategy into implementation, structural questions naturally arise. Should the committee begin with a dedicated “values-aligned sleeve,” such as a portion of the equity allocation? What is the timeline for expanding into additional asset classes? And does the investment committee have the expertise and capacity required to evaluate and monitor alignment with Catholic principles and key frameworks such as the USCCB SRIG and Mensuram Bonam?

In some cases, the answer may be to establish a dedicated sub-committee. Where internal resources are limited, a sub-committee can help monitor manager compliance, oversee screening processes, and coordinate proxy voting activities. Its mandate should be clearly defined, ensuring accountability while avoiding duplication of responsibilities.

Close alignment with the team is critical in determining whether a sub-committee structure is appropriate. The goal is not to add complexity for its own sake, but to ensure the governance structure is proportionate to the organization’s needs and capabilities.

Active engagement is now central to Catholic investing frameworks. The 2021 USCCB Socially Responsible Investment Guidelines and Mensuram Bonam both emphasize shareholder engagement as a tool to advance Catholic social teaching.

Engagement can include voting proxies, filing or responding to shareholder proposals, writing to management teams, participating in annual meetings, and leveraging public communications channels. For organizations with limited internal resources, this can be demanding. Here again, sub-committees or external partners can play an important role.

Collaboration is particularly powerful. Catholic investors may join coalitions or partner with like-minded institutions to amplify their voice, with different managers or advisors executing distinct components of an engagement strategy. Regardless of the degree of outsourcing, governance structures should clearly define engagement priorities.

Partnering with the right advisor, one with a deep understanding of and operational realities, can help determine which capabilities should remain in-house and which are best externalized. The objective is to pursue both investment outcomes and mission objectives efficiently and effectively.

A persistent misconception surrounding Catholic values-aligned investing is that mission alignment requires sacrificing returns. The market now offers a broad range of Catholic-aligned investment strategies, from exclusionary screening approaches to thematic and impact-oriented solutions.

Strong governance plays a critical role in addressing misconceptions. Clear frameworks, documented processes, and transparent reporting can help stakeholders understand how values are integrated without compromising financial rigor.

Another common question concerns cost and whether Catholic-aligned strategies require investors to pay higher fees. While cost structures vary, values alignment does not inherently imply higher expenses. Again, robust governance and intentional communication can clarify these issues and align stakeholders under a shared, informed understanding of the strategy.

There is no single model for Catholic investment governance, each organization’s approach should reflect its mission, objectives, stakeholders, and internal capabilities. Governance structures, and how rigorously they are applied, require a tailored, context-specific approach.

What remains consistent, however, is the central role of clarity, alignment, and accountability. When governance structures are thoughtfully designed, they create the conditions for Catholic institutions to pursue their mission through capital allocation, without treating faith and financial outcomes as mutually exclusive.

We work closely with investment committees to develop bespoke governance frameworks that integrate mission and investment strategy in a durable and practical way. To learn more, please contact your local Mercer representative.