The Church Commissioners and the Church of England Pensions Board have announced the £12m (€16.4m) divestment from high emissions-linked thermal coal and tar sands companies.
“From today neither body, nor the £1.9bn CBF Church of England funds, will make any direct investments in any company where more than 10% of its revenues are derived from the extraction of thermal coal or the production of oil from tar sands,” they said in a statement.
The announcement coincides with the adoption of a broad new climate change policy recommended by the Church’s Ethical Investment Advisory Group (EIAG) that sets out how the three ‘national investing bodies’ will support the transition to a low carbon economy.
They will divest, after “appropriate engagement”, companies that make a significant contribution to greenhouse gas emissions and which aren’t taking seriously “their responsibilities to assist with the transition to a low carbon economy”.
Moreover, they will increase their investments in climate change adaptation, and in areas such as sustainable energy, energy efficiency and carbon capture and storage.
The church investors say they want to be “at the forefront of institutional investors subject to legal fiduciary duties addressing the challenge of the transition to a low carbon economy”. They have concluded that they “can and should do more” on climate change, with the primary focus being engagement with companies and policy makers.
The 23-page document concludes that the policy is “not inconsistent” with the investing bodies’ fiduciary duties. The Church has been under increasing pressure over climate change over the past few years and faced a motion on the topic at its annual Synod in 2014.But the recent ‘Aiming for A’ shareholder resolutions at BP and Shell – in which the bodies are key members – have “set a new benchmark” for investor-corporate interaction on climate issues.
“This is one of the most comprehensive policy frameworks on climate change adopted by any institutional investor,” said Edward Mason, Head of Responsible Investment at the Church Commissioners.
“This is not about divestment v engagement. This policy talks to how institutional investors committed to ethical and responsible investment can integrate climate change considerations into their thinking and investment strategy.”
The Church bodies have provided additional funding to the Institutional Investors Group on Climate Change (IIGCC) to enable it to recruit a new head of EU policy. And they are contributing to the current project by consulting firm Mercer assessing the investment implications of climate change, a follow-up to its 2011 “Climate Change Scenarios: The implications for Strategic Asset Allocation” report that is due to be launched on June 4.
Nick Holtam, the Bishop of Salisbury and the Church’s environmental lead said the move “better aligns the Church’s investment practice with its belief, theology and practice”. And the Rev Canon Professor Richard Burridge, Deputy Chair of the EIAG, spoke of how the Church has a “moral responsibility” to speak and act on both environmental stewardship and justice for the world’s poor who are most vulnerable to climate change.
Pierre Jameson, Chief Investment Officer of the Church of England Pensions Board, called for a global policy framework that incentivises a reduction in carbon emissions and the transition to a low carbon economy.