Catholic investment funds screen their holdings by running each candidate company through a layered system built on the U.S. Conference of Catholic Bishops’ Socially Responsible Investment Guidelines: some activities trigger automatic rejection at any level of involvement, others are filtered by revenue thresholds, and the companies that make it into the portfolio are then pressed through proxy voting and direct engagement to behave better. The framework is deliberately principle-based rather than a fixed checklist, which is why two funds carrying the “Catholic” label can hold different stocks.
The Framework Behind the Screens
The USCCB’s Socially Responsible Investment Guidelines, approved at the body’s November 2021 General Meeting, organize Catholic investing around three pillars: Avoid Doing Harm, Actively Work for Change, and Promote the Common Good.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines
“Avoid Doing Harm” is the negative-screening pillar. It produces the exclusion lists that dictate which companies a fund cannot hold. “Actively Work for Change” requires managers to engage with companies they do own through proxy voting, shareholder resolutions, and direct dialogue with boards. “Promote the Common Good” pushes them toward positive screening and impact investing, favoring companies working on affordable housing, poverty, environmental sustainability, and similar goals.
The guidelines set policy, not a fixed rulebook. Individual fund managers retain discretion over the implementation details, including exact revenue cutoffs. The USCCB itself notes that defining what constitutes a “significant amount” of revenue from an immoral activity “is a matter of prudence as defined in the policies.”1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines Two legitimate Catholic funds can reach different conclusions about the same company.
Companies Excluded Outright
Some activities produce automatic rejection no matter how small the revenue stream. The USCCB will not invest in any company involved in or supporting abortion, euthanasia, or assisted suicide, including manufacturers of abortifacient products. Companies engaged in embryonic stem cell research, fetal tissue research, human cloning, or in vitro fertilization are excluded outright.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines
The 2021 update added a screen for companies that perform surgeries or administer drugs and hormones intended to delay puberty or modify the body to express an identity different from one’s biological sex.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines Companies producing pornography as their core business are excluded at any revenue level. Contraceptive manufacturers are also excluded outright, though companies that only sell contraceptives face a threshold screen instead.
Weapons screening is tiered. Any involvement in weapons the Church considers inherently inconsistent with just war teaching triggers exclusion, a category that includes biological and chemical weapons, landmines, cluster munitions, and nuclear weapons.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines Conventional firearms manufacturers are permitted only if their products serve hunting, military, or law enforcement purposes.
Companies Screened by Revenue Threshold
Other categories use revenue-based tests rather than a zero-tolerance rule. The USCCB guidelines exclude companies whose “primary purpose” is to derive revenue from gambling, tobacco, or recreational cannabis. Companies that sell but do not manufacture contraceptives are excluded when more than 10% of revenue comes from contraceptive sales.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines
Where the USCCB uses language like “primary purpose” or “significant amount” without naming a number, individual managers set their own cutoffs. Christian Brothers Investment Services (CBIS), one of the largest Catholic asset managers, applies a 10% revenue threshold to both pornography and certain fossil fuel activities, including thermal coal mining and oil sands extraction.2Christian Brothers Investment Services. Screening for Catholic Values Another manager might set the bar at 5%, or draw the line around different sub-activities. This is why a Catholic fund can hold a large conglomerate that earns a small share of revenue from a screened line while rejecting a smaller company in the same space.
The S&P 500 Catholic Values Index publishes its cutoffs explicitly. Abortion-related operations and products are excluded at any revenue level, alongside embryonic stem cell therapies, controversial weapons components, and adult entertainment production. Military contracting companies face a much higher threshold of 50% revenue from weapons-related products.3S&P Global. S&P Catholic Values Indices Methodology
How Managers Actually Run the Screens
Turning USCCB principles into an investable portfolio requires specialized data, ongoing monitoring, and a defined compliance process. The mechanics look different depending on whether the fund is passive or active.
Index-Based Screening
The S&P 500 Catholic Values Index, maintained by S&P Dow Jones Indices, starts with the full S&P 500 and removes companies that fail the screens.4S&P Dow Jones Indices. S&P 500 Catholic Values Index As of early 2026, the index held 444 of the S&P 500’s 503 constituents, meaning roughly 12% of companies were screened out. To keep the resulting portfolio from taking accidental sector bets, the index redistributes the weight of each excluded company to compliant companies in the same sector at every rebalancing.3S&P Global. S&P Catholic Values Indices Methodology When a healthcare company is excluded for embryonic stem cell research, its weight shifts to other healthcare firms rather than leaving the sector underweight.
Active Manager Screening
CBIS takes a more hands-on approach, screening across five issue categories: life ethics, violence, pornography, tobacco, and targeted fossil fuel producers. Their operating principle is to screen based on what a company does and to use active engagement when the concern is with how a company conducts business.2Christian Brothers Investment Services. Screening for Catholic Values
The compliance infrastructure behind that is more intensive than most investors realize. CBIS produces an updated restricted company list every quarter, audits portfolio holdings daily against that list, and automatically halts trades in newly restricted securities, typically reversing them before settlement.2Christian Brothers Investment Services. Screening for Catholic Values A company that passes screening in January can land on the restricted list by March after entering a new business line through an acquisition.
Engagement and Positive Screening
Excluding bad actors is only the first pillar. The USCCB guidelines expect Catholic investors to use their ownership stake to push companies toward better behavior, and to steer capital toward enterprises that serve the common good.
On the engagement side, managers vote proxies on issues ranging from board composition and executive compensation to environmental disclosure and human rights reporting. The 2021 guidelines specifically call for corporate dialogue and proxy voting to press companies for transparency on gender-identity-related medical activities.1United States Conference of Catholic Bishops. Socially Responsible Investment Guidelines Engagement continues even for companies that already pass the negative screens, because passing a screen is not the same as being a model corporate citizen.
Positive screening pushes managers toward companies demonstrating strong labor practices, environmental stewardship, renewable energy investment, and community development. Impact investing in affordable housing and poverty alleviation also sits under the “Promote the Common Good” pillar. A Catholic fund is not simply a standard portfolio with a few stocks removed; it tilts toward companies the manager believes are contributing something.
How to Check What a Specific Fund Screens
Because the USCCB leaves implementation details to individual managers, two funds both labeled “Catholic” can screen differently. The prospectus is where those differences show up: exact screens, revenue thresholds, and how the manager handles gray areas.
Catholic funds aren’t exempt from standard securities regulation. Any mutual fund or ETF that uses the word “Catholic” or “values” in its name falls under the SEC’s Names Rule, which requires the fund to invest at least 80% of its assets in the type of investment its name suggests.5U.S. Securities and Exchange Commission. 2025-26 Names Rule FAQs The 2023 amendments broadened this to cover fund names suggesting the fund focuses on investments whose issuers have “particular characteristics,” which captures faith-based and ESG-labeled products.
A fund can make its 80% policy either “fundamental” (changeable only with shareholder approval) or non-fundamental (changeable with 60 days’ notice to shareholders).5U.S. Securities and Exchange Commission. 2025-26 Names Rule FAQs For a Catholic investor, this distinction matters. A fundamental policy locks the faith-based screening in place. A non-fundamental policy gives the fund more flexibility but means the criteria could shift with relatively little notice. Read the prospectus before assuming any fund’s interpretation matches your own.