Biblical investing requires more than digital filters checking boxes. Evaluating whether companies align with Christian values demands human judgment, nuanced analysis, and experienced interpretation of complex business realities.
This article provides educational information about biblical research methodology. It does not constitute investment advice.
Beyond Simple Filtering
Some approaches to values-aligned investing use automated filters checking whether companies derive revenue from specific activities. These digital tools provide quick exclusion of clear misalignments but represent the beginning of biblical research rather than its completion.
The Limits of Automated Filtering: Digital filters answer yes/no questions about predetermined categories: Does a company derive revenue from alcohol? Gambling? Weapons manufacturing? They exclude companies based on straightforward criteria but struggle with questions requiring judgment.
What about companies with complex revenue streams where problematic activities represent small percentages? How should research evaluate companies transitioning away from concerning business lines? What about firms whose corporate culture and employee treatment matter as much as products sold? How do we assess environmental stewardship or commitment to human dignity?
These questions require humans examining business practices, evaluating corporate culture, assessing management decisions, and making informed judgments about alignment with Christian values.
Why Human Intelligence Matters: Biblical research involves interpreting principles and applying them to imperfect companies operating in a fallen world. This requires experience, wisdom, and willingness to engage with complexity rather than reducing everything to binary choices.
Capstone employs a dedicated biblical research analyst conducting this human-led evaluation. This analyst examines business models, reads corporate disclosures, assesses practices and policies, and develops informed perspectives about how companies score against biblical principles.
Companies exist on a spectrum from clear alignment to clear misalignment, with much nuanced territory between. Navigating this spectrum requires judgment automation doesn't possess.
The Biblical Research Analyst's Work
Research Scope: The analyst examines potential holdings before portfolio entry and monitors existing holdings continuously, ensuring companies maintain alignment over time.
Research encompasses multiple dimensions: what companies sell and how they operate. Employee treatment, environmental practices, corporate culture, community engagement, supply chain ethics, and governance all fall within the research scope.
Information Sources: Biblical research draws from public corporate disclosures, corporate sustainability reports, and third-party research including the partnership with Brightlight Impact. The analysis synthesizes information from varied sources, with analysts identifying relevant factors for evaluating Christian values alignment.
Ongoing Learning: Biblical research improves through accumulated experience. As the analyst evaluates more companies and encounters diverse situations, pattern recognition develops. Understanding how the Four Guiding Investment Principles apply across different industries, business models, and corporate contexts deepens over time.
Automated filters don't learn; they simply apply predetermined rules rigidly. Human analysts develop expertise that strengthens research quality as experience accumulates.
The Four Guiding Investment Principles
- Valuing Human Life: This principle examines how companies treat employees, customers, communities, and all stakeholders. Human research evaluates workplace safety records, labour practices, product safety, community impact, and whether business practices demonstrate respect for human dignity at all life stages.
- Stewarding Creation Responsibly: Research examines not just avoiding environmental harm but also whether companies contribute to responsible resource use, sustainable practices, and innovation serving human flourishing while respecting creation.
- Encouraging Human Flourishing: Research evaluates whether companies' products, services, and business models support human flourishing or exploit human weaknesses. This includes examining whether business models depend on encouraging addictive behaviors, unhealthy consumption, or practices harming individuals or communities.
- Applying Biblical Wisdom: This principle examines corporate culture, business ethics, and alignment with Christian values. Research explores whether companies demonstrate integrity, respect for truth, and corporate cultures aligned with biblical wisdom.
Company-Specific Analysis
Business Model Assessment: The analyst examines how companies generate revenue, what products or services they provide, and whether business models align with Christian values. This goes deeper than product categories, exploring whether the business model itself demonstrates respect for people, creation, and biblical principles.
Revenue Source Evaluation: Companies often have diverse revenue streams. Biblical research must assess not just primary business lines but also secondary activities that might create concerns. The analyst evaluates revenue concentration, considering whether problematic revenue sources are core or peripheral.
This requires judgment about thresholds and materiality. At what point does revenue from concerning activities disqualify a company? These questions require case-by-case assessment.
Corporate Culture Examination: Beyond products and revenue, biblical research examines corporate culture. How does management treat employees? What values does leadership communicate and demonstrate? Do corporate practices reflect integrity and respect for stakeholders?
The BIO Committee: Collective Wisdom
The Biblically Informed Oversight Committee brings collective wisdom to biblical research, providing governance and accountability.
Committee Composition: The BIO Committee comprises four members with 100+ years of combined investment experience evaluating companies from a biblical perspective. Importantly, one independent member is external to Capstone Asset Management, ensuring biblical research doesn't become insular or develop blind spots.
Review and Voting Process: All stock selections undergo BIO Committee review before inclusion. The biblical research analyst compiles research and submits it to the committee. Members review the analysis, examine companies against the Four Guiding Investment Principles, discuss cases requiring nuanced judgment, and vote on whether companies meet criteria.
This governance ensures biblical research isn't determined by a single individual's interpretation. Multiple experienced perspectives evaluate each decision, providing checks and balances.
The Independent Member: The independent external member brings viewpoints internal team members might miss, can ask questions internal members might not consider, challenge assumptions that might go unexamined, and ensure biblical research serves fund investors rather than organizational convenience.
Partnership with Brightlight Impact
Capstone partners with Brightlight Impact, an independent third-party resource that performs analysis in addition to Capstone's research to provide support to decision-making.
Brightlight Impact conducts independent research on companies being considered for portfolios. Their analysis provides additional perspective beyond Capstone's internal biblical research, helping identify concerns or considerations that might not emerge from a single research source.
This partnership does not function as validation or a report card. Rather, Brightlight Impact provides independent analysis informing the overall decision-making process. Having multiple research perspectives examining companies from different angles helps ensure important factors aren't overlooked.
Acknowledging Complexity
Biblical research must acknowledge reality: no companies operate perfectly in a fallen world.
The Spectrum of Alignment: Companies exist on a spectrum from strong alignment with Christian values to clear misalignment. Biblical research must navigate this spectrum, identifying companies that are at least morally neutral and ideally aligned with biblical values such as justice, integrity, and humility.
Automated filters create binary categories: included or excluded. Human research recognizes gradations and makes contextual decisions about what level of alignment suffices.
Interpretation and Application: The biblical research process reflects Capstone's interpretation and application of biblical principles. Christians of goodwill may interpret some principles differently or weigh various factors differently.
Capstone's biblical research analyst and BIO Committee make informed judgments based on Scripture, accumulated wisdom, and careful analysis. These judgments won't align perfectly with every individual's convictions, and that's understood.
Ongoing Monitoring
Biblical research continues after companies enter portfolios. Ongoing monitoring ensures holdings maintain alignment as circumstances change.
Capstone's dedicated biblical research analyst monitors portfolio holdings continuously. Corporate actions, business changes, policy shifts, or new information trigger additional research. Companies don't receive permanent approval; they must continue meeting criteria.
When monitoring reveals concerns, the biblical research analyst evaluates the situation and, if warranted, brings it to the BIO Committee for review. The committee determines whether the concern warrants continued monitoring, corporate engagement, or removal from the portfolio.
Why Experience Matters
Pattern Recognition: Experienced analysts develop pattern recognition about how the Four Guiding Investment Principles apply across different industries and business models. This accelerates research and improves judgment about complex cases.
Contextual Judgment: Different industries face different values alignment issues. What constitutes meaningful environmental stewardship differs between technology companies and resource extraction firms.
Balancing Competing Considerations: Some companies demonstrate strong alignment on certain dimensions while showing weakness on others. Balancing these requires experienced judgment about what matters most.
This defies automation. It requires humans who understand biblical principles, comprehend business realities, and can make informed judgments about complex trade-offs.
Transparency: The Biblical Overlay Policy
Capstone makes the Biblical Overlay Policy publicly available, providing transparency about the biblical research methodology.
The Biblical Overlay Policy documents how biblical research works, including the Four Guiding Investment Principles, the Four Components of Investment Analysis, and the focus areas of Biblical Alignment Filters. This documentation helps investors understand what they're investing in.
The Biblical Overlay Policy is available at capstoneassets.ca and should be reviewed by anyone considering investment in these funds.
Conclusion
Biblical investing benefits from human intelligence because values alignment requires judgment that automation cannot replicate. The Capstone Biblically Informed Canadian and U.S. Equity Funds demonstrate this approach through dedicated biblical research analysis, BIO Committee governance, and partnership with Brightlight Impact for independent third-party research.
This human-led research acknowledges complexity, requires experienced judgment, and provides transparency through the publicly available Biblical Overlay Policy.
For more information about biblical research methodology, to download the Biblical Overlay Policy, or to contact the team with questions, visit capstoneassets.ca or call 1.855.437.7103.
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