Religious Investors Would Banish Scandal Plagued Funds

For half of the religious investing contingent though, there is little question, as they said they would definitely dump a mutual fund that heldcompanies engaged in these activities, according to an opinionsurvey released by Mennonite Mutual Aid (MMA) and its MMA Praxis Mutual Fundsreport.

In fact, the recent corporate scandal may have flamed the religious fervor in some.   Almost half (46%) of those investors that now consider themselves religious said the recent spat of corporate skullduggery influenced them to consider their religious beliefs and values more seriously when making investment decisions. Only one-third of religious investors said the scandals had no effect on their investment decisions.

Topping the list of ethical concerns for the religious investor is the operation of sweatshops, followed by:

• Product safety record
• High executive compensation
• Environmental record
• Adult entertainment.

On the rise among the leading concerns were high executive compensation levels.   Of the top five ethical concerns for all investors in 2003, four are the same as were identified two years in another MMA/MMA Praxis survey, with high pay among the C-suite replacing labor relations in the top five.

“The picture of religious investors that emerges from these survey findings is an interesting and complex one,” commented MMA Senior Vice President of Financial Services and MMA Praxis President John Liechty. “These data may serve to demolish the stereotype that religious investors are narrowly concerned with only traditional ‘sin’ issues, such as pornography and abortion products.  While those topics certainly are a factor in the thinking of many religious investors, they do not preclude concerns about far-ranging ethical issues in the ‘secular’ business world.”

Sin Stocks

Even though the traditional “sin” issues may not register as high on the radar, they still influence investing decisions among the devout, particularly in putting money in adult entertainment firms and companies that produce abortion products.   Compared to other investors, religious respondents are more likely to avoid investing in companies associated with sin industries or issues.

As evidence, the study provided a five-to-one scale – five being very likely to avoid and one being not likely to avoid.   Religious investors ranked adult entertainment at 3.6, whereas nonreligious investors ranked it at a lower 2.9. Avoidance of companies producing abortion products stands at 3.4 for religious investors and 2.6 for other investors.   Other lines were drawn with investments in:

• Tobacco – 3.3 for religious investor; 3 for others
• Operate casinos – 2.9 for religious investors; 2.5 for others
• Alcohol – 2.7 for religious investors; 2.3 for others
• Homosexual benefits – 2.7 for religious investors; 2.3 for others.

Demographically Speaking

The effects of this movement could be widespread given that over half (57%) of the people polled identified themselves as investors.   Of those, 80% consider themselves religious or spiritual, with the majority identifying themselves most closely with one of three Christian traditions: Protestant (46%), Catholic (23%), or evangelical Christian (15%).

“This report has major implications for the financial and business worlds because, contrary to popular belief, most individual investors are religious. And, it is apparent these investors are paying attention to the ethical practices of the world around them, including the businesses in their mutual funds and stock portfolios,” said MMA President and CEO and MMA Praxis Chair Howard Brenneman.

Female investors are more likely to characterize themselves as religious or spiritual than are male investors, 85% compared to 75%. Older investors are more likely to consider themselves religious. A full 85% of investors over 65 consider themselves religious, compared to 73% in the 18 to 34 range.

Reports of being religious also vary by region, with the highest percentage (86%) coming from the South.   Among race, the only significant factor was found in African American investors where a full 91% classify themselves as religious or spiritual.

The report is based on data from a new Opinion Research Corporation (ORC) International survey of 2,096 Americans, including 1,199 investors. MMA commissioned the survey. The MMA survey report, The Ethical Issues Report: What Matters to Religious Investors, is available at  http://www.mma-online.org/pdf/2030459_investing_survey.pdf .