Biblically Responsible Investing vs ESG: What Differs?

What is the difference between biblically responsible investing and ESG?

Biblically responsible investing, or BRI, screens investments against a faith-based standard. ESG investing looks at environmental, social and governance factors. Both can use screens. They start from different questions: BRI asks what fits biblical values, and ESG asks how a company handles E, S and G factors.

This post is general education. It is not investment, tax or legal advice. Investing involves risk of loss.

What is ESG investing?

ESG stands for environmental, social and governance. The SEC’s Investor.gov explains that ESG investing “has grown in popularity in recent years, and may be referred to in many different ways, such as sustainable investing, socially responsible investing, and impact investing.”

The same bulletin warns that definitions are not fixed. It says that “some factors are not defined in federal securities laws, may be subjective, and may be defined in different ways by different funds or sponsors.” It also says: “There is no SEC ‘rating’ or ‘score’ of E, S, and G that can be applied across a broad range of companies.”

So “ESG” does not mean one thing. Two funds can both use the label and hold very different companies. That is the first lesson of this topic.

What is biblically responsible investing?

BRI means choosing investments in line with biblical values. Our glossary entry on biblically responsible investing gives a short definition. The details vary by investor, church, advisor and fund.

Some investors screen out industries they believe conflict with their faith. Some also look for companies they want to support. Which areas count is a judgment, and Christians disagree. A different fund family or advisor may draw the lines in different places.

That is why one question matters more than any label: who decides what counts as biblical, and where are the lines written down?

How do they compare?

The SEC bulletin adds another point that applies to both: “Different funds may weight environmental, social, and governance factors differently.” In the same way, two BRI portfolios may weigh the same issue differently.

What are the trade-offs of screening?

Any screen narrows the list of companies you may hold. That is the point of a screen. It also means you should ask how the portfolio is built to stay diversified. Diversification spreads money across many investments so no single one decides your outcome.

We do not claim that any screen helps or hurts results. Nobody can promise that. We ask clients to weigh these trade-offs:

1. Conviction. Do your values call for a screen?
2. Clarity. Can you read the rules in plain words?
3. Breadth. Does the portfolio still hold many kinds of investments?
4. Cost. What will you pay in fees and expenses? Read the fund documents.
5. Taxes. Will a screen cause extra selling in a taxable account? Ask your CPA.
6. Review. How often are the screens reviewed, and by whom?

What should I ask before I invest?

Use this list with any advisor, fund or portfolio, BRI or ESG.

• What is the stated strategy, in the fund’s own documents?
• Which screens are used, and who decides?
• What does the fund do when a company changes?
• How are fees and expenses disclosed?
• What are the risks the documents describe?
• How does the portfolio fit my tax situation? Our asset location entry explains one idea here.
• Is the advisor a fiduciary? Our fiduciary entry defines the term.

The SEC bulletin lists a similar step before you invest: be sure the fund’s investment strategy is consistent with your goals.

Who decides what counts as biblical?

No single body decides. A church may hold one view, a denomination another, and a fund family a third. Some investors want a short list of firm exclusions. Others want a wider approach that looks at how a company treats its workers, customers and neighbors. Both can come from sincere faith.

That is why Seek First starts with your values, not with a product. We ask what you believe, what troubles your conscience and what you want your money to support. Then we look at how a portfolio can reflect that. We do not name funds or products in a blog post, and we do not say one view is the only right one.

If you read a fund that calls itself biblical, ask who wrote the screens, how often they change and whether a church or board reviews them. The same questions apply to any fund that calls itself ESG.

How does Seek First approach this?

Seek First says it builds “diversified portfolios tailored to your values, risk tolerance and timeline to support both family provision and purposeful giving.” Seek First is a fiduciary. We make no promises about results. Our page on biblically responsible investing explains how we talk about values and portfolios, and our Christian financial advisor page explains what a faith-based advisor does.

Investing is also one part of a plan. Taxes, retirement and giving all belong in the picture. See our posts on QCDs and donor-advised funds and tithing for how giving and investing connect.

Next step

If you want to talk about how your values fit your portfolio, see our biblically responsible investing page. Then schedule a free call for a 20-minute complimentary consultation, or call (866) 398-4044.