Mission Integration in FSM’s Investment Policy Statement
The Franciscan Sisters of Mary have embedded mission alignment directly into their Investment Policy Statement (IPS), treating it as a key factor alongside traditional financial considerations such as safety, liquidity, risk, and return.
Mission-Based Investment Preferences
The IPS outlines a hierarchy of mission alignment in investment selection:
1. Impact Investments: Investments in organizations that produce measurable positive social and/or environmental impact.
2. Positive Screening: Preference for companies considered top performers based on:
– Environmental, Social, and Governance (ESG) criteria
– Franciscan and Catholic values
3. Negative Screening: Exclusion of investments in organizations that:
– Engage in activities contrary to FSM’s mission and values
– Are defined in FSM’s Guidelines – Social Responsibility in Corporate Investment
Mission-Aligned Private Impact Portfolio Allocation
FSM further distinguishes its mission-aligned private impact investments into two
categories:
High-Quality Mission Investments (18.5%)
– Expected to generate market-rate, risk-adjusted returns
– Aligned with mission goals
Deep Mission Investments (2.5%)
– Seek transformational impact tied to the Congregation’s mission
– Willing to accept some combination of:
• Higher risk
• Concessionary returns
• Reduced liquidity
Positive Screens
The Franciscan Sisters of Mary apply a values-driven approach to investing, guided by Catholic Social Teaching and a deep commitment to human dignity, environmental stewardship, and the common good. Across both equity and fixed income portfolios, FSM partners with managers who integrate rigorous positive screening and ESG principles to align investment decisions with our mission.
Equity Portfolios – Managed by Aperio Group
FSM’s four equity portfolios, managed by Aperio Group, use a Catholic Values scoring system to tilt investments toward companies demonstrating strong performance in key ethical and sustainability areas:
– Human rights
– Environmental responsibility, including climate change
– Diversity and inclusion
– Workforce treatment
– Community investment
Aperio also applies Low Carbon Footprint criteria, which tilt portfolios away from companies with higher greenhouse gas emissions. Specifically, this includes companies with elevated direct (Scope 1) and indirect (Scope 2) emissions, as well as high emissions intensity, measured as metric tons of CO₂ equivalent per million dollars of market capitalization.
Fixed Income Portfolio – Managed by Nuveen
Nuveen manages FSM’s core fixed income portfolio with an integrated Environmental, Social, and Governance (ESG) approach applied to all corporate bond investments. Using data primarily from MSCI, supplemented by internal analysis and collaboration with Nuveen’s Responsible Investing and Impact teams, the strategy favors companies demonstrating ESG leadership within their industries. Evaluations are sector-specific and focus on key indicators such as climate impact, resource use, labor practices, governance quality, and involvement in ESG-related controversies. Companies must
meet minimum ESG performance standards to be eligible for investment, and those falling below these thresholds after purchase are divested within a reasonable period, subject to market conditions.
Rather than applying blanket exclusions by industry, Nuveen’s process seeks the best-managed companies in each sector—those with strong governance, sound risk controls, and positive community and workplace practices. The investment philosophy holds that such companies are better positioned to manage long-term risks and avoid legal, regulatory, or reputational harm. Securities not covered by third-party ESG research are ineligible for investment.
Investment in Morgan Stanley Climate Solutions Fund
In 2019, the Franciscan Sisters of Mary (FSM) made a mission-aligned investment in the
Morgan Stanley Climate Solutions Fund, a diversified multi-asset class vehicle designed specifically for nonprofit institutions seeking to address climate change through their portfolios. This fund exemplified FSM’s commitment to investing in solutions that advance ecological justice while maintaining prudent financial oversight. With fiduciary oversight provided by Comerica Bank & Trust, N.A., and sub-advised by Morgan Stanley, the fund offered daily liquidity, competitive risk-adjusted returns, and innovative impact reporting—making it an ideal fit for FSM’s high-quality mission investment category.
The Climate Solutions Fund distinguishes itself by targeting investments that support climate change mitigation and adaptation. Its strategy eliminates exposure to companies involved in coal, oil, and nuclear energy, and instead focuses on environmental leaders across all sectors, emphasizing best practices and sustainability performance relative to peers. It also excludes the Carbon Underground 200—the top 100 coal and 100 oil and gas companies with the highest potential for carbon emission —aligning with FSM’s exclusionary screens. The fund actively invests in themes such as clean energy, sustainable agriculture, pollution control, water solutions, and environmental infrastructure, through a curated group of independent managers across global, U.S., and international equities as well as fixed income.
Inspired by the leadership and values of the Dominican Sisters, the fund incorporates Catholic values into its investment selection and carries forward a legacy of active shareholder engagement. For FSM, this investment represented both a strategic financial decision and a public witness to the congregation’s dedication to climate justice, responsible stewardship, and the compassionate care of creation.
In November 2024, FSM decided to liquidate its investment in the Climate Solutions Fund due to the fund’s partial shift away from direct impact strategies toward a more passively managed ESG approach, which no less aligned with FSM’s impact-focused investment priorities. Additionally, the fund’s fees and lack of meaningful environmental and social impact reporting made it less compelling compared to FSM’s other investments.
Investment in Community Capital Management (CCM)
In 2023, the Franciscan Sisters of Mary (FSM) committed capital to Community Capital Management (CCM) as part of their mission-driven investment strategy, aligning their portfolio with goals of social and environmental justice. CCM is a fixed-income investment manager known for directing capital toward underserved communities across the United States. Through investments in high-credit-quality bonds, CCM finances initiatives that promote affordable housing, environmental sustainability, economic opportunity, and community development—core priorities for FSM.
The investment seeks to generate market-rate returns while achieving measurable impact in line with Catholic values. A significant portion of FSM’s investment through CCM supports projects with direct benefits to low- and moderate-income populations, such as financing for federally designated Opportunity Zones, disaster recovery, minority and women-owned business development, and health and wellness services. Additionally, CCM emphasizes racial equity and climate resilience in its investment screening, contributing to systemic change in historically disinvested communities.
FSM’s partnership with CCM reflects the Congregation’s commitment to deep mission investments that offer both financial stewardship and social transformation. With transparent impact reporting and a targeted use of proceeds, this investment enables FSM to activate its capital in service of healing, equity, and the compassionate care of creation.