According to a Vatican rule released on Tuesday, the Holy See’s financial holdings cannot conflict with Catholic teaching.
The policy clearly states that Vatican investments must “be aligned with the teachings of the Catholic Church, with specific exclusions for financial investments which contradict its fundamental principles, such as the sanctity of life or the dignity of the human being or the common good.”
The guidelines further state that the Holy See and affiliated entities’ investments should aim to produce a suitable return in a sustainable manner while also making a positive impact on a more just and sustainable world.
The policy, which carries on Pope Francis’ reform of the Vatican’s finances, becomes effective on September 1.
Investments will be made through APSA, the treasury and sovereign wealth manager for the Holy See, and will be governed by a four-person ethical committee of financial professionals, led by Cardinal Kevin Farrell.
According to the policy, the Vatican and related entities may not invest in products and technologies related to “pornography and prostitution; gambling; weapons and defence industry; pro-abortion health centers; and laboratories or pharmaceutical companies that manufacture contraceptive products and/or work with embryonic stem cells.”
Oil and mining, nuclear energy, and alcoholic drinks are among the sectors the policy advises investors to stay away from but which are not specifically forbidden.
There will be a one-year grace period for Vatican entities to divest current investments that are not in accordance with the new policies.
A Vatican treasury investment in various pharmaceutical firms that produced the “morning-after pill” was allegedly made with 20 million euros (about $24 million) in April 2021, according to an Italian investigative news programme.
The policy states that while evaluating investments, care should be taken to ensure they adhere to the social philosophy of the Catholic Church, which is based on the values of human dignity, the common good, subsidiarity, and solidarity.
The guidelines also exclude investments designed to be speculative or of a speculative strategy “unless necessary for the efficiency of investment transactions or to hedge risk.”
“The decision to invest in one place rather than another… is always a moral and cultural choice,” the policy says.
An oversight committee will authorise investments; it was established last month after nearly two years in the making.
Cardinal Kevin Farrell was chosen president of the new oversight committee on June 7, a body established by the Vatican’s new constitution, Praedicate evangelium.
Four financial professionals will serve on the group under Farrell’s leadership: Giovanni Christian Michael Gay, managing director of Union Investment Privatfonds GmbH; Jean Pierre Casey, founder and manager of RegHedge; David Harris, portfolio manager of Skagen Funds; and John J. Zona, chief investment officer of Boston College.
The Irish American cardinal has been in charge of the Vatican’s internal financial choices since 2020, which go against other standards of accountability.
Members of the committee are appointed by Pope Francis for a five-year term with the potential of reappointment, according to the committee statutes, which were released on July 19.
For five years, the committee will run as an experiment.