What is biblical responsible investing – and why does ownership matter?
In this episode of Retire in Texas, Darryl Lyons, CEO and Co-Founder of PAX Financial Group, begins a two-part conversation on faith-based (biblical responsible) investing and why it often sparks such strong reactions.
Darryl breaks down what biblical responsible investing actually is, how it works within portfolios, and why it goes beyond the idea of “Christian companies.” He also addresses common skepticism and explores the deeper question of whether investing is simply a financial decision – or a spiritual one.
This episode focuses on two of the four common perspectives on faith-based investing: those who are new to the concept and those who remain unsure or skeptical.
Episode highlights include:
• What biblical responsible investing is – and what it is not.
• How screening, mutual funds, ETFs, and managers are used in faith-based investing.
• Why ownership and consumption are not the same – and why that distinction matters.
• Real-life examples of how personal convictions shape investment decisions.
• The role of shareholder advocacy and proxy voting in aligning money with values.
• Why faith-based investing isn’t about perfection, pressure, or judgment.
In Part 2, Darryl will explore the remaining perspectives – including investors who are fully committed and those who prefer a blended approach.
To learn more or start a conversation, visit PAXFinancialGroup.com and click “Connect With Us.”
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Transcript:
So, I want to start today with an observation, not an argument. Over the last several years, I’ve had a lot of conversations with peers, friends, colleagues about faith-based investing. Also, we call this biblical responsible investing as well. Let me get my mic. It’s kind of messing with me here.
But yeah, faith-based investing, biblical responsible investing. It’s surprising how many different reactions you get when we talk about that. There’s four different groups of people and I’m going to talk about all four of them. There’s people that have never heard of faith-based investing, biblical responsible investing. I use this synonymously. So, people have never heard of it.
The second group is people who have heard of it but are deeply skeptical, like, yeah, that’s just not for me. The third group are those that are like all in, they’re on fire. They’ve drank the Kool-Aid. They’re convicted. And the fourth group. It’s like all of those in between, like, I’ll do some faith-based investing, but not a lot of it.
Just some, I’ll add some ingredient to the recipe. Those are four different groups of people when it comes to faith-based investing, I’m going to talk about all four of those groups of people in more detail. And I’m going to do in a two part series, because when I developed the content, I couldn’t fit it into one.
This is Darryl Lyons. I’m the CEO and co-founder of PAX Financial Group, and you’re listening to Retire in Texas. This information is general nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information. If you’re looking for just a money and retirement conversations, this really continues to keep you grounded in what’s most important in life.
It doesn’t use a lot of numbers. That’s, this is exactly the right show for you. So, thanks for tuning in. And so, the first group I want to talk about is like, is really those people have just never heard of faith-based investing before. What is that, biblical responsible investing? You know, the challenge is that the words, we used to call it years ago, social responsible investing and they just kind of all overlap.
Again, we’re going to use, let’s use, let’s stick with biblical responsible investing because faith-based investing could make a case that it’s a different faith. So, we’re going to stick with biblical responsible investing. And I’m going to walk you through all of these four camps. I’ve never heard of it. I’ve heard of it. But I have reservations. I’m skeptical.
This is second camp. Third I’m all in. This is the only type of investing I want to do. And then the fourth group, just kind of vacillating, you know, I want to do some, but not all. And then I’ll also share with you my, you know, where I’m at on this stuff, just to be vulnerable because I think that’s important.
Anyways, so let’s talk about the first group. I’ve never heard of this before. So, this is where I just kind of educate you a little bit more about what this is. And even if you have heard of it, it’s probably good to get a refresher. Namely, biblical responsible investing is going to be in stocks and bonds. But don’t think of it like companies that some people ask us are those Christian companies?
Well, that’s not really possible for a company to accept Jesus Christ as their Lord and Savior. So, there’s no such thing as Christian companies, but there are companies whose behaviors align with a biblical worldview. And that’s what you’re looking for. The methodology that is used to invest in these companies are typically screening tools. And this is done mostly, not always, through a manager.
So, a mutual fund is where thousands of people across the country mutually fund an account together. There’s one manager, there’s sometimes multiple managers. They could be in New York, they could be in Dallas. They’re responsible for buying and selling stocks on your behalf. So, you can go about life. You can go to your grandkids baseball game, and you can be, you know, doing life.
And you don’t have to worry about what stocks to buy. That’s a mutual fund. And a new iteration of that uses computers more than people. That’s called an exchange traded fund, but they’re both funds. So, these funds, you can find there’s thousands of them that specifically screen out companies. They screen out companies that are misbehaving regarding a biblical worldview.
So, they’re doing things to undermine a biblical worldview. Now, there’s also biblical responsible fund companies that are actively seeking companies and investments that are encouraging human flourishing or doing good or and then there’s all combinations of both. There’s different methodologies. But one of the things I want to make clear is that it’s not a Christian company.
I know I’m stating the obvious. Let me give you an example. A friend of mine, Robert Netzly, he was working at Wells Fargo years ago. And Robert, if you’re listening, sorry if I’m butchering some of the details, but this is how I remember you telling me the story. And he’s told it several times to several people and on stages working at Wells Fargo.
He’s a financial advisor in California. And looking out the window and sees an abortion clinic and starts thinking to himself, I am investing my client’s money. I’m seeing this abortion clinic. I’m curious if any of the companies my clients own are funding that clinic. So, he looks it up and sure enough, a lot of the companies that were in his clients’ portfolios were funding abortion clinics, and these were Christians who were very much against abortion.
They’re very much pro-life. So, he realized and dawned on it right away, there’s this hypocrisy that he was facilitating where he was taking people’s investment dollars to completely undermine what was most important to them. And so that’s when he said, I’m out of here, Wells Fargo. And he went to start a company called Inspire Investing, and he’s done really, really well.
And it’s like one of the largest faith-based investing firms in the world. Now, this was his calling. And that’s a good example of how this happens. And now his company specifically screens out companies that are misbehaving relative to a biblical worldview. Let me give you another example. This, young man, this is a true story.
I don’t know his name, though. His grandmother died from lung cancer, and he absolutely had a wonderful relationship with his grandmother, loved her to death. Lung cancer was a byproduct of tobacco usage. Smoking. Come to find out, when he settled the estate, half, 50% of her money was invested in tobacco. And it just dawned on, you know, this doesn’t make sense.
I can’t unsee this anymore. I cannot invest in companies that are destroying my family. One last example, a guy who I met refuses to invest in all things gambling. By the way, if you look at gambling now, it’s legit. I was telling my wife the other day, look at commercials now for sporting events, Spurs events, football.
And it used to be all beer. Now it’s all gambling. Online gambling. It’s a big business. This guy that I met refused to do any business with gambling companies in terms of buying stock in those companies, because growing up, his dad, this was on an Indian reservation, would always go to the casinos and basically abandoned their family.
And so, he just saw the addiction and says, I’m not going to support that industry. This is what happens when this conviction hits you, and you recognize that you do not want to have a bifurcated life where you’re saying one thing is important to you, but on the other hand, your money’s doing something else. And so that’s the manifestation, the realization that a whole industry came around from this cognitive dissonance that occurred in people’s minds where they could not any longer, have their money working against them.
And so that’s how the biblical responsible investing industry really materialized. Now, again, some companies really focus on exclusion. I’m going to take out companies. There’s amazing technology that can do this because some companies it’s really easy okay, maybe tobacco, maybe I’ll call. You know, those can be excluded pretty easy. But then there’s companies where you don’t know if their HR policies are saying, we will not allow Bible study.
There’s some HR policies that and they it’s lighten up lately but are very much have been very antagonistic towards Christians. There’s technology now that we can use as Christians to scrub websites to identify those policies exist and, exclude them from portfolios. And then, of course, there’s the inclusion piece where we want to own companies that are making the world a better place, that are taking care of the vulnerable, those that are downstream, you know, it’s the ones that are downstream from the river that, end up having and I’m using that illustrated to help you understand that oftentimes it’s the people that we don’t think about that are suffering and our dollars are not intentionally going towards relieving that suffering.
Biblical responsible investing. Some companies, they hyper focus on how do we relieve that suffering. The other thing they do, biblical responsible investing is shareholder advocacy. This is really, really important because when you have a stock, you are entitled to ownership and it’s called a proxy vote.
So, you get to vote. You could vote for the CEO. You could vote board members, maybe not CEO, but board members for sure. You get to vote for material issues. Not petty issues, but material issues. And what happens when you transfer your money to a mutual fund. The transfer of that right to vote is also transferred to the fund.
So, if the fund has a different worldview than you, they may be voting for something that’s totally antithetical. Like let’s say they voted, I’m going to make this up. But it’s an example. Let’s say they voted to exclude focus on the family from their charitable list because let’s, you know, I’m making up a company. So XYZ company says we’re no longer going to invest and focus on the family because they’re a hate group.
Well, if you had a vote, you could say, that’s inconsistent with my values. I disagree that vote’s really important because Christians have stepped away from that voting conversation, and as a result, their voices haven’t been heard. But now people who are using biblical responsible investing, the fund managers are now going to these corporate boardrooms and saying, we’ve got a group of investors that disagree with what you’re trying to do, even if they aren’t the majority, they’re at least helping people think through that.
There’s another group of people out there that care and this shareholder advocacy piece is often an understated piece in biblical responsible investing. It’s made a huge, huge difference in the past five years. So that’s a function of biblical responsible investing a lot of people discount. And the last thing I want to say about biblical responsible investing is that there’s very smart people involved.
It’s not just Podunk people, just a bunch of Christians that, you know, aren’t educated. These are look them up. There’s PhD, CFA, CFPs, I mean, very, very smart people, people who worked at Harvard, MIT, they were chief investment officers at Blackrock, very smart people have left the secular world to be a part of biblical responsible investing.
So very, very smart people. That’s, you just went, I just took you from. I don’t know anything about it. Now, you know something. So, I’m glad you joined me in this journey. It’s certainly up to you to kind of navigate all those details. But now you know a little bit more.
Now let’s move to the second group of people this is I’ve heard of it, but I’m really skeptical. Okay. This I get it that the case is being made is like, why would I invest in Apple when I use a mac? Or why would I or I’m sorry, why would I exclude Apple from my portfolio when I use a mac?
Or why would I exclude Coca-Cola when I drink Diet Cokes? Right? Like so. I can’t get around this idea that I’m consuming something and it’s going to be a problem if I own it and I can’t reconcile, it gets all confusing, so I’m just not going to worry about it. So, here’s the case I want to make.
Ownership and consumption are not the same thing. Let me give you a sobering example. This founders of a company called backstage.com. They didn’t actually. Well, I mean, I was going to say they didn’t do anything illegal. Let me explain. So they wrote ads, and they were very successful. I’m sure they had all the money that they wanted and they were community rockstars.
They probably even gave money to charity to just make them look good. But the ads they wrote were not just classified ads for buying and selling TVs and cars. They were solicitation of prostitutes. Well, that’s problematic. But then you look even further. And it was human trafficking. Well, that’s a real problem. Then you look further and it’s children and now you’re disgusted.
And if you’re not disgusted, please get disgusted with me because it’s one of the most disgusting things of our generation. And so, this company backstage.com, they were these two guys. That’s what they were doing. They’re facilitating all of it. So, in 2023, they were convicted on multiple federal charges related to human trafficking.
And the courts, they rejected the idea that ownership insulated them from responsibility. See, they didn’t write the ads. They didn’t even meet the traffickers. They weren’t really involved, but they were writing the check to make the whole thing work. Ownership, hear me out. The court said this ownership did not insulate them from responsibility. Now, I can’t say that I know spiritually how accountability works on this side of heaven.
And, but I just don’t want us to be naive. On the neutrality of ownership. I don’t want us to be naive on the neutrality of ownership. There’s a higher level of responsibility, and I think it’s just everyone’s kind of conviction there. But let’s be intellectually honest. Let’s not be uninformed. Money is very, very deeply spiritual. And again, the Bible has a lot to say about this.
But one example is Judas tried to give the money back and they wouldn’t take the blood money. That should say something that these priests, these very religious people said, I’m not taking blood money, bad money is not money we want. There’s something very spiritual about money. The Scripture says you can either love the one or hate the other, be devoted to one or despise the other.
But man cannot serve both God and money, and money is. And actually, the original text is actually says Mammon, which is even a scarier thought because it’s with a capital M, which is a spiritual being. It’s a whole other theology. But what I want you to know is this whole money and investing thing is much more spiritual than we think, so it’s up to you to pray about it.
I know you might be skeptical and I get it. And one of our core values at PAX is respect. So, we have five core values teamwork, excellence, respect, constant improvement and kindness. And that respect is that we respect everyone’s unique life story. So, if you’re coming into this journey and you started out I don’t know anything about investing, you’re.
I don’t know anything about biblical responsible investing. You’re in that first camp. Now you know a little bit more. So, keep digging. The second group is I get it. I’m just really skeptical about it. You can be skeptical the rest of your life. This isn’t a moral judgment. It’s just my objective is to try to help you understand a little bit about the pros and cons and, frankly, understand the deep spiritual nature of money.
The next two groups of people, though, we’re going to talk about them in our next podcast. These are people that are like on fire for it. And then the other group of people are like somewhere in between, I want to invest, but maybe not all of it. So, we’re going to talk about all of those. We’re going to talk a little bit about performance of faith-based investing next time, but I hope I laid the foundational pieces.
So now that you understand what biblical responsible investing is, you understand the power of ownership, and maybe you will do some more digging and working with your advisor. PAX can be a part of that spiritual journey with you. Thank you for tuning in today. And remember, you think different when you think long term. Have a great day.
Disclosure: This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Biblically Responsible Investing (“BRI”) involves, among other things, screening for companies that fit within the goal of investing in companies aligned with biblical values. Such screens may serve to reduce the pool of high performing companies considered for investment. Investing involves risk. BRI investing does not guarantee a favorable investment outcome. PAX Financial Group has conducted due diligence for their Biblically Responsible Investing (BRI) process and proudly serves as each client’s advocate using fully vetted third-party specialists for the administration of BRI methodology. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product and should not be relied upon as such.
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