Just when you thought there was only room in the world for one Catholic values index, a second comes along, courtesy of S&P Dow Jones Indices, which announced the launch of the S&P 500 Catholic Values Index on August 19. The new index comes after the MSCI USA Catholic Values Index (USD). “We wanted to have an index like this, while Global X expressed an interest in such an index,” said Julia Kochetygova, head of sustainability indices at S&PDJI. “Their enquiry coincided with our idea to have some sort of religious indices in the US and Europe.”

Both indices rely on the socially responsible investment guidelines created by the US Conference of Catholic Bishops to select their constituents, with the S&PDJI version looking to S&P 500 companies for its selection pot and MSCI taking its universe from its own USA IMI ESG Index.

Both filters are fairly all-encompassing, with MSCI unrelenting on companies involved in the following areas: alcohol, tobacco, gambling, civilian firearms, nuclear power, military weapons or genetically modified organisms, with the specific exclusion based on Catholic values including: abortion, abortifacients, adult entertainment, contraceptives and stem cells. MSCI describes its index as “a free float-adjusted market capitalisation index designed to be used as a US equity benchmark for Catholic investors who seek equity ownership in alignment with the moral and social teachings of the Catholic Church”.

S&P DJI takes its screening straight from the Bishops and cites the restrictions as excluding companies operating inconsistently with the following Catholic values: biological weapons, chemical weapons, cluster bombs, landmines; nuclear weapons – any exposure to whole systems and strategic parts; conventional military sales – companies that have their primary business activity as military products; and child labour employment in the company’s operation or in supply chain.

“Some companies are excluded completely, no matter how minor the exposure is,” said Kochetygova. “But for some activities, like conventional military sales, only those companies who have this as a major activity, meaning more than 50% of revenue exposure, will be excluded, with others included. With adult entertainment content sales, for media companies, TV operators, hotel chains and telecommunications companies, the revenue threshold is 1%, to account for those for which this is minor traffic.”

The launch of S&PDJI’s index comes along with an announcement that the index provider has already licensed its version to Global X for the development of an exchange-traded fund. The index presents a "new path that helps support our clients’ businesses", said Jim Glowina, regional consultant at Global X, in a statement.

The creation of the index has also been supported by Father Seamus Finn, chief of faith consistent investing at the Oblate International Investment Trust, in the same statement.

The MSCI index was created 17 years ago and is available only in the US, according to a spokesperson. The MSCI index has slightly underperformed the index provider’s USA index, and was quoted at 185.84 on July 15, against 194.51 for the benchmark index.

The MSCI USA Catholic Values Index uses company ratings and research provided by MSCI ESG Research, particularly the MSCI ESG Intangible Value Assessment, MSCI ESG Impact Monitor, and MSCI ESG Business Involvement Screening Research.

Kochetygova makes the obvious comparison with Shariah indexes, while noting that the index provider is thinking about other religious indices in Europe.

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