Where ESG and Faith-Based Investing Differ with Nick Schmitz | FaithFi
August 21, 2026
Where ESG and Faith-Based Investing Differ with Nick Schmitz
Faith & Finance with Rob West
ESG investing promises to align your portfolio with your values. But an important question remains: Whose values are shaping the standards?
Environmental, social, and governance ratings are often presented as measures of corporate responsibility. Yet the assumptions behind those ratings may not always align with biblical convictions.
Nick Schmitz, Professor of Finance at The Catholic University of America and a Board Member of the Christian Investing Council (CIC), joined the show today to explain the differences between ESG and faith-based investing—and why Christians should pay attention not only to what they own, but also to how their shares are voted.
ESG investing promises to align your portfolio with your values. But an important question remains: Whose values are shaping the standards?
Environmental, social, and governance ratings are often presented as measures of corporate responsibility. Yet the assumptions behind those ratings may not always align with biblical convictions.
Nick Schmitz, Professor of Finance at The Catholic University of America and a Board Member of the Christian Investing Council (CIC), joined the show today to explain the differences between ESG and faith-based investing—and why Christians should pay attention not only to what they own, but also to how their shares are voted.
ESG and Faith-Based Investing Start in Different Places
ESG stands for environmental, social, and governance. ESG ratings attempt to evaluate companies based on their performance in each of those areas.
But Schmitz points out that ESG standards are developed by secular ratings agencies and can shift with cultural and political trends. Faith-based investing starts somewhere different: with convictions rooted in biblical truth.
That distinction matters because a company may receive strong ESG ratings while supporting practices that conflict with a Christian investor’s beliefs about issues such as the sanctity of human life, religious liberty, family, or human dignity.
There may certainly be areas of overlap. Christians care about justice, responsible stewardship, fair treatment of employees, and care for creation. But agreement on certain issues does not mean the underlying moral frameworks are the same.
Faith-based investing asks a deeper question: Does the way this company operates—and the way my ownership stake is used—reflect the convictions I am seeking to live by?
Your Shares Come With a Voice
One area investors may overlook is proxy voting.
Owning shares in a publicly traded company generally gives investors the opportunity to vote on certain corporate matters. But individual investors rarely cast those votes themselves. Instead, asset managers often rely on large proxy advisory firms to provide recommendations or process votes on their behalf.
That means Christians may unknowingly own investments whose shares are being voted in ways that conflict with their beliefs.
Schmitz offered an example involving shareholder proposals related to Google and crisis pregnancy centers. Some proposals sought changes in how those organizations appeared in search results and were characterized positively within ESG-oriented frameworks. Faith-based investors, however, could reach a very different conclusion because of their convictions regarding the unborn and the work of pro-life ministries.
For Christian investors, then, screening a portfolio may be only part of the stewardship equation. How shares are voted can matter too.
Moving Beyond Passive Ownership
Schmitz has been involved in developing proxy-voting policies designed to better reflect Catholic investment principles. The effort grew from concern that existing guidelines did not always reflect the convictions they claimed to represent.
The broader lesson applies to Christian investors of many traditions: we do not necessarily have to outsource our influence without asking questions.
Faith-based investing can involve both screening and engagement.
Screening considers whether a company’s products, services, or practices conflict with an investor’s convictions. Engagement asks whether shareholders can encourage companies toward practices that better promote human flourishing.
That makes faith-based investing more than a list of companies or industries to avoid. Shareholders can also use their ownership to advocate for positive change.
Christians Can Care About Creation Without Agreeing on Every Policy
The “E” in ESG stands for environmental, which sometimes creates the impression that faith-based investors give little attention to environmental stewardship.
Schmitz argues that this does not have to be the case.
Christians may disagree about exactly how environmental concerns should be addressed, but waste, pollution, and responsible care for creation are legitimate stewardship concerns. Investors can support companies working to reduce genuine environmental harm while also considering the economic consequences of particular policies, especially for workers and lower-income communities.
The difference is that Christians can recognize room for prudential disagreement.
Biblical stewardship gives us principles to guide our thinking, but believers may reach different conclusions about the best policies or business practices to address a particular environmental concern. That calls for humility, wisdom, and careful discernment rather than assuming every issue has a one-size-fits-all solution.
Look for Managers With “Skin in the Game”
Schmitz also encouraged investors to consider whether the people managing their money have what author Nassim Nicholas Taleb famously called “skin in the game.”
When Schmitz worked as a fund manager, for example, he invested his own capital alongside the investors whose money he managed.
That kind of alignment can matter. A manager who shares both the potential rewards and the downside risk has an added incentive to exercise discipline and think long-term.
For Christian investors, alignment can go even deeper. Do the people managing your investments understand your convictions? Do their investment policies reflect them? Are they transparent about how companies are screened, how proxies are voted, and how shareholder engagement is conducted?
Christian investors should not assume that an investment is biblically aligned simply because it carries a faith-related label. Transparency matters.
Common Misconceptions About Faith-Based Investing
Schmitz highlighted several misconceptions investors should reconsider.
First, ESG is not morally neutral. Like every investment framework, it rests on assumptions about what is good, responsible, and worth promoting.
Second, faith-based investing is not merely negative screening. Christian investors can encourage good corporate behavior through shareholder engagement, proxy voting, and collaboration with other investors.
Third, bringing Christian convictions into investing is not an inappropriate intrusion of faith into an otherwise neutral marketplace. Every investor brings values into financial decisions in some form. Christians should not feel compelled to leave deeply held beliefs outside the investment process.
Finally, individual investors are not necessarily powerless. Shareholders can work together, support resolutions, engage company leadership, and influence how large asset managers vote.
The question is whether Christians will use that influence intentionally.
Questions to Ask About Your Investments
If you want to know whether your investments reflect your convictions, start by asking questions.
If you work with a financial advisor or investment manager, ask how your investments are screened and how proxy votes are handled. If most of your retirement savings are held through an employer-sponsored plan, ask your plan provider what proxy-voting policies apply to the funds you own.
You can also examine Christian mutual funds and exchange-traded funds that publicly disclose their screening standards, voting policies, and shareholder-engagement practices.
The goal is not perfection. Investing in a complex economy will always require wisdom and discernment. But greater transparency can help investors make more informed stewardship decisions.
Keep Your Investment Horizon Eternal
Schmitz closed with advice he regularly shares with young people entering finance:
Character matters more than credentials. Work ethic, courage, and integrity can open doors over the course of a career, but ambition must remain submitted to something greater than personal achievement.
For the Christian, that means keeping Christ at the center.
Financial markets reward investors who are willing to think beyond the next quarter or the next headline. Christians have an even longer horizon. We make financial decisions knowing that earthly returns are temporary and faithfulness to Christ has eternal significance.
That perspective changes the way we think about investing. We are not merely asking, “What return can this investment produce?”
We are also asking, “What am I supporting with the resources God has entrusted to me?”
Faith-based investing is ultimately another opportunity to practice faithful stewardship—seeking to align our financial decisions with our convictions while remembering that our ultimate treasure is not found in any portfolio, but in Christ.
On Today’s Program, Rob Answers Listener Questions:
I’m an elementary teacher looking to supplement my income, and I recently earned my life and health insurance license. A friend invited me to join WFG. Is that a good option for part-time work, or are there better ways to use the license?
I opened a savings account after receiving a promotion offering a cash bonus if I deposited funds and left them there for 90 days. I met those requirements, but now the bank says I failed to enroll in the promotion, even though the invitation didn’t mention that step. What should I do to dispute this?
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