* Guidelines are overhaul after years of money scandals
* Investments to be centralised; portfolio managers vetted
* Policy frowns on speculating in commodities, oil, mining
* No more investments in private equity funds, official says
By Philip Pullella
July 19 (Reuters) - The Vatican on Tuesday issued an overarching investments policy to ensure they are ethical, green, low-risk, and avoid weapons industries or health sectors involved in abortion, contraception or embryonic stem cells.
The guidelines order Vatican departments to close their investment accounts or stock holdings in foreign banks, including in Italy, and transfer them to the Vatican Bank, to be overseen by a department called the Administration of the Patrimony of the Holy See (APSA).
The investments are estimated at just under 2 billion euros ($2.05 billion).
The Investment Policy Statement (IPS), a radical overhaul after years of financial scandals, strips all Vatican departments of the ability to invest their funds independently.
It was this practice that allowed the Secretariat of State to invest directly in a London building that is at the centre of a corruption trial. The botched deal resulted in a loss of 140 million euros. All the defendants have denied wrongdoing.
"The fundamental objective is to discipline investments and centralise them," said a senior Vatican official, speaking on the condition of anonymity. "It is more organised, more controlled, more transparent, definitely a step forward."
The Secretariat of State, the Vatican's most important department that oversees diplomacy and all other departments, was already stripped of control over its funds in 2020.
"The decision to invest in one place rather than another, in one productive sector rather than another, is always a moral and cultural choice," one of the principles of the 20-page IPS says.
It follows the establishment last month of a committee to oversee investment ethics. It is made up of non-Italians: Irish-American Cardinal Kevin Joseph Farrell, who is based at the Vatican, and four outside lay financial experts in Britain, Germany, Norway and the United States.
The IPS prioritises investments that "contribute to a more just and sustainable world", including assets whose issuers are environmentally friendly, favouring clean and renewable energy, biodiversity and waste recovery.
It bans investments in funds even indirectly associated with pornography, gambling, weapons and defence industries, pro-abortion health centres and laboratories or pharmaceutical companies that make contraceptive products or work with embryonic stem cells.