Church of England investment bodies in warning to extractives companies over world heritage sites

Campaign groups welcome extractives policy at influential investor

The investment bodies for the Church of England have warned extractive companies in their portfolio against operating in world heritage sites, as part of a new extractives policy that could potentially mean divestment for companies that don’t respond to engagement.

RI spoke to Adam Matthews, Head of Engagement for the Church Commissioners, about the new policy. He said the Church’s National Investing Bodies’ (NIBs) “expect extractives companies to make ‘no go’ commitments not to operate in protected world heritage sites” – including categories one to four of the International Union for Conservation of Nature (IUCN) – warning that the investment bodies would “seriously” engage with any that do.

Matthews, who is also Secretary of the Church’s Ethical Investment Advisory Group (EIAG) which advises the NIBs, said there is “no theological issue with being in extractives industries but what was absolutely clear was once you extract you have a responsibility”.

Launched last month, the Church’s first dedicated policy for the extractives industry aims to provide a “coherent”, “aligned”, and “distinctively Christian” approach to investments in the sector by its three investment bodies: the Church Commissioners, the CBF Church of England Funds (managed by CCLA) and the Church of England Pensions Board.

The National Investing Bodies collectively manage around £11bn (€12.5bn).

The new policy, which sees engagement as the “principal and most effective means” to address ethical concerns and monitor company performance, is the product of an 18-month review and consultation.

Matthews described it as a “much more comprehensive approach to the whole sector and extractives than we’ve had before”.

He added, “as a result of this policy, we will now be ethically profiling all the extractive companies in which we have holdings, we will use that assessment on an annual basis to then assess the issues that each individual company presents, and this will form the basis of our engagements”. This process is set to begin in the first quarter of 2018.Due to the practicalities of engaging “meaningfully” with investments generated through investment vehicles such as ‘tracker funds’, the policy also adds that the “NIBs may decide to take steps to limit their exposure to small holdings in extractives companies because of the ethical risk they may display”.

The policy does make provisions for divestment, citing cases “where poor governance is found alongside other high ethical and ESG risks, and a judgment is made that engagement would be ineffective, those companies may, at the discretion of trustees, be placed on the NIBs’ restricted list”.

In 2015, the Church Commissioners divested its £1.6m holding in Soco International, the London-listed oil and gas extraction firm, partly due to the company’s proposed operations in a world heritage site in the Democratic Republic of Congo (DRC).

Additionally, RI was told that the NIBs are currently assessing a range of data sources to address the issues that the policy calls them to engage on, and in relation to world heritage sites are looking at “boundary data” that bodies such as the World Conservation Monitoring Centre can provide.

Chris Gee, a spokesperson for global environmental campaign group WWF, said he was “delighted” by the “significant action” the Church bodies were taking and that it would “provide a strong signal” to other investors and the extractives sector. Back in June In June, RI interviewed Lord Turner – a WWF Ambassador — on the role of banks in protecting world heritage sites.

Meanwhile, campaign group BankTrack late last month filed a motion to dismiss a lawsuit brought against it and Greenpeace by the US based master limited partnership behind the Dakota pipeline project, Energy Transfer Partners (ETP), over their opposition to the project.

In the motion the NGOs slam the lawsuit as “an attack on the fundamental First Amendment rights of citizens and nonprofit organizations engaged in public policy advocacy work”.