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Can a new policy change the Vatican’s investment culture?

The Vatican announced Tuesday a new unified investment policy, set to place all curial assets under the management of APSA, the Holy See’s sovereign wealth manager, which will administer all investments through a single fund for the entire Holy See, and adhere to a new ethical investment policy in line with Church teaching.

The policy is likely to be welcomed and opposed in equal measure within the Vatican, especially to the extent that it might catalyze the internal accountability and oversight that Vatican reformers have long pushed for.

But when it comes to effecting real change to the Vatican’s way of doing business, personnel is likely to remain far more important than the policy itself, regardless of the policy’s details. And it is not clear that the new policies will sufficiently address the Vatican’s problem with choosing good partners for doing business — and that may prove to be the making or breaking of the new regime’s effectiveness.


The announcement, made July 19 by the Secretariat for the Economy, said that oversight of the new policy, fund, and investments will fall under an investment committee created by Praedicate evangelium, and led by Cardinal Kevin Farrell, the cardinal camerlengo. 

According to a press statement, under the new policy the Vatican’s new super-sovereign wealth fund will only invest in projects which “are aligned with the teachings of the Catholic Church, with specific exclusions of financial investments that contradict its fundamental principles, such as the sanctity of life or the dignity of the human being or the common good.” 

“In this sense, it is important that they be aimed at financial activities of a productive nature, excluding those of a speculative nature,” the statement said.

For many Catholics, it might come as a shock that the Holy See has not, until now, had a single, coherent, ethical investment management policy. 

It is probably less of a surprise to those who have been following the ongoing Vatican financial scandal and trail. It is likely no surprise at all to those who have worked in and around the Vatican’s financial apparatus for years.

In April last year, it was reported that APSA had previously invested heavily in pharmaceutical companies producing and distributing so-called “emergency contraceptives” and only pulled the Vatican’s money when it was detected by the former auditor general of the Holy See, Libero Milone, and reported to senior curial officials.

One former senior official at the Secretariat for the Economy told The Pillar at the time, “the desire to have a clear policy for ethical investments was a priority under the initial phase of reforms which [former prefect Cardinal Pell] tried to bring in. It was on a very short list of top priorities, but virtually no progress was ever made.”

That progress appears to have been made now, though how quickly and how firmly it will be established remains an open question, both in terms of the centralizing of curial investments into a single Vatican sovereign wealth fund and the implementation of a new ethical investment policy. 

Bringing all departmental assets under one central roof is, for sure, a change. 

For centuries, the departments of the Vatican have maintained and managed their own financial accounts, in some cases very large ones — at some times, it’s been estimated that Propaganda fide, now called the Dicastery for the Evangelization, might actually be richer than the Holy See itself.

For the larger departments, financial independence has traditionally meant a degree of operational independence, and the centralization of the power of the purse will necessarily mean a certain degree of centralizing authority, too, and that may be part of the point of the reforms. 

Few can escape the conclusion that the pope’s reforms are in direct response to the ongoing financial scandal and trial involving the Secretariat of State. 

The Secretariat of State lost control of its own assets and investments, along with stewardship of the pope’s personal discretionary funds, more than a year ago, in an earlier round of reforms.

As The Pillar reported in May last year, officials at the secretariat, which has been jokingly referred to as the third Vatican bank, seemed slow to comply with the pope’s new rules

Other dicasteries were given Tuesday a year to adjust to the new directive. But Vatican-watchers have already begun asking whether other departments with large patrimonies will seem to drag their feet on giving up control of their finances.

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 The new policy on Vatican investments now explicitly prohibits Vatican funding of industries or practices that might seem obviously out of bounds for Church backing, including investment in makers of abortifacient drugs — experience has apparently proven the need to write these things down.

But beyond those limitations, the Secretariat for the Economy also announced a broad prohibition on investments “of a speculative nature,” while noting that “the decision to invest in one place rather than another, in one productive sector rather than another, is always a moral and cultural choice.” 

What constitutes “speculative” is also a choice, or, rather, a judgment call. And who makes that call will matter a great deal.

APSA’s newly minted investment committee, made up of external experts and headed by Cardinal Farrell, has direct oversight of those decisions. It is not clear how the cardinal and his advisers will define the notion of “speculative” investment.

Coincidentally, “speculative” was the word official Vatican media used in 2020 to describe Raffaele Mincione’s handling of the Secretariat of State’s investments, shortly before the first Vatican arrests were made in its investigation of financial crimes.

But while the new policy might appear to be aimed squarely at preventing another scandal (and loss) the size of the Secretariat of State’s now famous purchase and sale of the London building at 60 Sloane Ave., it’s worth bearing in mind that many experts would have considered London real estate to a bankable investment — a prudent financial decision. 

Most analysts have concluded that the problems with the London deal were never really about the value and potential of the building itself, but about the men in and around the Secretariat of State who structured the deals

The recent scandal and trial suggests that the Holy See has proven itself ruinously bad at evaluating business partners as much as plans; Rome has a penchant for relying on friends of friends and a culture of personal connections.

While previous reforms for the Vatican city state have sought to bring in more transparent mechanisms for approving deals with external contractors, the reality is that, whatever any policy might say, choosing an investment manager or advisor is mostly an act of personal evaluation and trust. 

The extent that the new Vatican sovereign wealth fund and investment policy will be seen to work likely depends more on the people with whom they choose to do business, rather than on the projects in which they choose to invest.

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