RI Comment: Justin Welby: The high priest of responsible investment?

The investment implications of the Archbishop of Canterbury’s comments about Amazon

The Archbishop of Canterbury is in the news again, this time over his comments about Amazon.

Justin Welby has been all over the UK newspapers’ front pages this week slamming the online retailer for paying little tax – which has led to accusations of hypocrisy when it emerged that the Church Commissioners (which he chairs) hold Amazon stock. Indeed it’s one of the church’s largest holdings.

He also railed against zero hours contracts, and then it emerged that at least two cathedrals are advertising jobs with zero hours.

It would be easy to portray Welby as a foot-in-mouth clergyman who’s out of touch. But his comments, made at a set-piece speech at the Trades Union Congress, the union umbrella body, received a standing ovation, so he’s tapping into something.

Five years ago Welby triggered a similar backlash over his comments on Wonga, when it subsequently emerged the Church held shares in the payday loans firm indirectly.

But, this time round, it is virtually impossible that Welby did not know that Amazon is one of the church’s top holdings. So he seems prepared to risk the ‘hypocrisy’ headlines to make his point and – importantly – appears comfortable with putting the spotlight onto the Commissioners in this way. One possible reading of the situation is that he’s trying to prod the Commissioners into action.

We hate to say it, but the “active shareholder” line put out by the Commissioners in response to the media storm simply doesn’t work in the broader public arena where nuances get lost in tabloid hyperbole.

The Archbishop chairs the Commissioners in an ex officio capacity but, formally, the Commissioners are accountable to Parliament, the General Synod and the Charity Commission. But as chair and head of the church he has clear moral leadership.

This episode echoes the church’s grappling with the fossil fuel divestment/engagement debate. Last November Welby wrote in the New York Times of the moral crisis of climate change ahead of a group of bishops calling on the Church investing bodies to show “moral leadership” and divest Exxon.

It’s worth noting that Welby is on record as supporting divestment — in his capacity as president of the Responsible Investment Advisory Council at Canadian asset manager BMO Global Asset Management (the former F&C).

It is this under-the-radar role that is interesting.

As RI has reported, BMO has “heavily engaged” with Amazon on a “wide waterfront of issues under all three pillars of environmental, social and governance” — focused on employment conditions at the company’s distribution centres.We understand that Welby is very active in his role at BMO and, as president of the panel, can be assumed to be in the thick of this. So, he is not as naïve as he appears; he’s just going public.

The Commissioners said in a statement: “As with other issues, we take the view that it is more effective to be in the room with these companies seeking change as an active shareholder than speaking from the side-lines.”

Whether that is Welby’s own personal view is open to question, given his remarks. On the BMO website, Welby says: “The way people’s pensions and savings are managed should not be isolated from their personal values.”

Who are the Church Commissioners? There are 33 of them and among their number are two BlackRock executives (Mark Wooley and Poppy Allonby), Towers Watson’s Jeremy Clack, former Bridgepoint executive Graham Oldroyd, Schroders’ Duncan Owen and April Alexander of the Pensions Regulator.

“Pensions and savings should not be isolated from personal values.”

The row comes as the Transition Pathway Initiative, which is led by the Church of England’s National Investing Bodies (‘NIBs’), has had a major boost in a tie-up with the Climate Action 100+ initiative, as we report today.

The Church Commissioners don’t disclose the companies they hold beyond the top 20 in their annual report.

The Commissioners use ‘non-financial’ data from MSCI ESG Research to monitor their public equities portfolio and proxy voting firm ISS Europe, where it has an agreed bespoke policy template. There is no public record of the church voting against any Amazon director.

The only specific mention of Amazon in the bodies’ recent reporting is that the Church Commissioners opted to withdraw support for a shareholder proposal on voting policy at the company. This had been tabled by Newground Social Investments and, according to corporate governance expert James McRitchie, went to “the heart of democracy, or lack thereof, at Amazon”.

There is no specific mention of Amazon in the latest report (released in June) of the Ethical Investment Advisory Group (EIAG), the body which advises the Commissioners, the CBF Church of England Funds and the Church of England Pensions Board.

The Commissioners developed and launched a new engagement programme on corporate tax in 2017, to run to 2020, underpinned by independent data analysis. It’s a collaborative effort through the Principles for Responsible Investment involving 12 other asset owners and over 30 fund managers. How this pans out in the light of Welby’s latest comments will be fascinating to watch.