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A Moral Portfolio Audit

This is what an Ethos Mandate audit actually looks like.

Below is a complete, realistic demonstration of the Moral Portfolio Audit deliverable — the concrete output of the Ethos Mandate™ framework applied to a representative Catholic household. The client is hypothetical. The pattern is not.

Prepared For The Campbell Household
Portfolio Size ~$1.25M
Accounts Four
Report Date April 2026
Executive Summary

What We Found.

A representative Catholic household portfolio — and the hidden exposures within it.

The Campbell household brought a portfolio of approximately $1.25 million held across four accounts at a major brokerage: a joint taxable account, two IRAs, and a 401(k) rolled over following a career change. Their holdings reflect what we see in the majority of Catholic households: broadly diversified index funds, a healthcare sector ETF, a target-date fund inside the IRA, and a small cash reserve.

On the financial side, the portfolio is competently constructed. On the moral side, it contradicts their stated convictions in five distinct ways. They had no idea.

Current Alignment Score
52
out of 100
Projected After Realignment
94 / 100

Top findings

  • Approximately 14.3% of the portfolio funds pharmaceutical firms with revenue ties to abortifacient contraception and fetal-cell-line research.
  • Approximately 8.1% of the portfolio sits in media conglomerates and hospitality REITs with adult-content subsidiaries.
  • Approximately 22.4% of the portfolio includes firms with documented supply-chain labor violations at material thresholds.
  • A 3.1% exposure to defense contractors with indiscriminate-weapons revenue.
  • Only 17.9% of the portfolio currently meets the Ethos Mandate's positive-allocation criteria.
Section One · Scoring

Exposure by Moral Category.

Each category is evaluated against thresholds drawn from the USCCB SRI Guidelines and the broader Magisterium.

Moral Category Current Ethos Target Status
Sanctity of Life 14.3% 0% Fails
Pornography & Indecency 8.1% 0% Fails
Human Dignity · Labor 22.4% ≤ 5% Review
Environmental Harm 11.2% ≤ 5% Review
Indiscriminate Weapons 3.1% 0% Fails
Positive CST-Aligned Holdings 17.9% ≥ 40% Below
Fails indicates any exposure to an absolute exclusion — non-negotiable under the Mandate. Review indicates material exposure exceeding the threshold filter. Below indicates a positive-allocation target not yet met. A fully aligned portfolio resolves all three states.
Section Two · Holdings

Line-by-Line Inventory.

Every position is decomposed to its underlying revenue mix and evaluated against the Mandate.

Holding Account Allocation Flagged Exposure
Large-Cap Growth Index Fund Taxable 38.2% 11.2% Sanctity · 4.1% Pornography
Global Diversified Equity Roth IRA 22.6% 3.1% Sanctity · 2.8% Labor
Target Retirement 2040 Rollover IRA 18.4% 14.1% aggregated across categories
Healthcare Sector ETF Taxable 10.1% 38.4% Sanctity — primary driver
International Small-Cap Fund Roth IRA 4.8% Under review · labor threshold
Short-Term Bond Fund Taxable 3.5% Aligned
Money Market (cash reserve) Taxable 2.4% Aligned
Section Three · Red Flags

The Five Material Exposures.

Each is named, sized, grounded in Church teaching, and paired with a specific corrective action.

01 Sanctity of Life

Pharmaceutical & Healthcare Exposure.

Magnitude ~14.3% of total portfolio · via Healthcare Sector ETF and Large-Cap Growth Index

The Healthcare Sector ETF holds meaningful positions in firms with documented revenue from abortifacient contraception, emergency contraception, and research programs using embryonic cell lines. Smaller but material positions flow through diversified large-cap index exposure. The USCCB identifies these as absolute exclusions — no reasonable threshold.

Proposed Action Full divestment from the Healthcare Sector ETF; transition underlying large-cap exposure to a direct-indexed S&P 500 replication with Ethos Mandate screens applied.

"No Catholic investor can in good conscience fund what the Church identifies as the destruction of the unborn."

— USCCB · Socially Responsible Investment Guidelines
02 Pornography · Indecency

Media & Hospitality Conglomerate Exposure.

Magnitude ~8.1% of total portfolio · via Large-Cap Growth Index and Target Retirement 2040

Several large-cap media firms derive meaningful revenue from adult-content subsidiaries, including on-demand streaming divisions of hotel chains held within the portfolio. The Target Retirement 2040 fund's passive structure includes these holdings without filter.

Proposed Action Replace the Target Retirement 2040 fund with a CST-screened glidepath allocation across the IRA. Apply threshold screens to the Large-Cap Growth Index via direct indexing.

"Every human being is created in the image of God, and this dignity is not negotiable."

— Compendium of the Social Doctrine of the Church
03 Human Dignity · Labor

Supply-Chain Violations.

Magnitude ~22.4% of total portfolio · diffuse across equity holdings

A significant portion of the portfolio is exposed to multinational firms with documented supply-chain labor violations — particularly in cobalt mining, textile manufacturing, and electronics assembly. No individual holding fails outright, but cumulative exposure materially exceeds the Mandate's 5% threshold.

Proposed Action Apply labor-threshold screens at the direct-indexing layer. Tilt toward firms with published supply-chain audits and third-party verification. Projected reduction: 22.4% → 3.8%.

"The laborer is worthy of his hire."

— Luke 10:7
04 Environmental Harm

Extractive & Industrial Exposure.

Magnitude ~11.2% of total portfolio

Exposure to extractive firms with documented environmental harm concentrated in communities with limited recourse. Laudato Si' frames this as a justice question, not an ideological one — the poor bear the cost.

Proposed Action Apply environmental-harm threshold screens. Retain exposure to responsible operators; exclude firms with unresolved violations.

"A true ecological approach always becomes a social approach — to hear both the cry of the earth and the cry of the poor."

— Pope Francis · Laudato Si'
05 Indiscriminate Weapons

Defense Contractor Exposure.

Magnitude ~3.1% of total portfolio · via Large-Cap Growth Index

A small but non-zero exposure to firms deriving revenue from weapons the Catholic just-war tradition identifies as indiscriminate by nature. Absolute exclusion under the Mandate.

Proposed Action Exclude named firms at the direct-indexing layer. Retain exposure to legitimate-defense contractors that do not meet the indiscriminate-weapons test.

"The use of arms must not produce evils and disorders graver than the evil to be eliminated."

— Catechism of the Catholic Church, § 2309
Section Four · Transition

The Tax-Aware Path to Alignment.

Moral alignment does not require abandoning tax discipline. It requires sequencing it properly.

I.
Days 0 – 30

Retirement Accounts

Full realignment of Roth IRA and Rollover IRA. Replace Target Retirement 2040. Captures 58% of the alignment gap.

Tax impact: none (tax-qualified)

II.
Days 30 – 90

Taxable Transitions

Divest Healthcare Sector ETF. Begin direct-indexed replication of the large-cap core with Mandate screens.

Within a client-defined LTCG budget

III.
Days 90 – 180

Finalize Alignment

Complete direct-indexing tilt. Apply labor-threshold and environmental screens. Finalize the positive-allocation sleeve.

Harvested against offsetting losses

IV.
Ongoing

Monitor & Engage

Quarterly alignment report, annual deep review, proxy-voting actions, corporate engagement.

Monitored continuously

Projected Outcome

At the end of Phase III, the household's Moral Alignment Score rises from 52 to approximately 94. The residual 6-point gap reflects small positions where the Mandate's threshold filters permit remote material cooperation within a diversified portfolio — a deliberate conservative tolerance, not a compromise.

Section Five · Stewardship

What You Receive, Quarter After Quarter.

An audit is a beginning, not an ending. Alignment requires continuous attention.

The Quarterly Report

Every ninety days: current Moral Alignment Score, any new exposures introduced by corporate activity, proxy-voting actions, and commentary on developments in Catholic Social Teaching affecting the framework.

The Annual Deep Review

Once a year, every holding is re-audited from scratch. Corporate revenue mixes shift; companies enter and exit the index; new flags emerge. The annual review confirms yesterday's alignment is still today's.

Proxy Voting & Engagement

Ownership implies voice. Where holdings meet thresholds permitting shareholder engagement, we vote proxies in accordance with the Mandate and engage with corporate leadership on specific moral concerns.

Formation

Quarterly reports include a short reading from the Catholic theological tradition on stewardship, vocation, and the moral life. The portfolio is one expression of that life — not the whole of it.

Your Audit

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What you just read is a demonstration. A realistic composite of what the Moral Portfolio Audit produces for a household that has never had their holdings examined through the lens of Catholic Social Teaching. The difference between a compromised portfolio and an aligned one is rarely conviction. It is almost always information.

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