Why people of faith should stay away from the "Christian Equity Index"

First what the Index is, and then my comments on it.

There are many financial indexes of this sort, some claiming to be ethical, some claiming to be Islamic, this one claiming to be Christian, and so on.

Are such indexes having an impact? Yes, though perhaps not yet as much of an impact as the originators of these indexes hope. But it is early days yet. The first major such indexes started only in the 90s, though there is an older tradition of them, going back at least to the days of apartheid.

Most such indexes take the top-performing companies and subject them to some sort of "screen" in order to eliminate those deemed unsuitable on the basis of certain criteria, for example: pornography, weapons, tobacco, gambling, usury and/ or environmental damage. In other words, only the most profitable of the largest companies avoiding these sorts of things are allowed to be included in the Index.
So investors are saved the trouble of having to screen each company themselves. They simply decide which of the above criteria are important for them, find which of the indexes shares their criteria, then investors can simply lean on the the work done by the screeners who produce that particular index.

However, there is a danger in leaning too heavily on such Indexes: one needs to be vigilant regarding whether the criteria are in fact being followed. For example, most so-called "Islamic" companies do not really eschew usury, they simply find one way or another around it. In the case of the so-called "Stoxx Europe Christian Index", its major difference from the criteria mentioned above is that it adds birth control to the list. In view of that, it is astonishing to find GlaxoSmithKline on the list of companies approved by what is really a Roman Catholic Index, given that GlaxoSmithKline Lamictal, Elogen, Yaz and perhaps other birth control pills.

But why do I say that "people of faith should stay away" from this Index, whether it is Christian or Roman Catholic? Because the Index claims that it includes only those companies whose revenues derive from sources approved "according to the values and principles of the Christian religion".

Leaving aside what is meant by "the" Christian religion (there is no such thing, as Eastern Orthodox, the Roman Catholic, Jehovah's Witnesses, Christian Science, Mormons, and various others all claim to represent "the" Christian religion), there is the question of what the "values and principles" of the religion are, and whether these are adequately represented by the criteria of this particular Index.

In my view, the "Christian Index" is a trivialisation and a travesty, because it leaves out what the Bible calls "the larger matters" of social justice and environmental care.

Most important of all, in typical Roman Catholic fashion, the Index simply "baptizes" the existing economic order and financial system, without any clear standard on the basis of which the system as a whole can be evaluated. For example, the Index bypasses the requirement of relationships which, if nothing else, is central to the teaching of the Bible from the very first chapters of Genesis right to the end of Revelations.

For a much more Biblical approach to the matter of investing, see resources from the Jubilee Foundation, for example "Beyond Capitalism: Towards a Relational economy" http://www.jubilee-centre.org/document.php?id=346&topicID=3. See also: http://www.citylifeltd.org and http://www.creditaction.org.uk.

I conclude that an Index that can reliably be used by people of faith has yet to be invented.

Meanwhile, the best thing to do is to investigate the many businesses that you know personally which are being run by people of faith, and invest in those of them that do meet, in your view, whatever criteria you deem appropriate for an ethical business. Sphere: Related Content