The Church of England’s three national investing bodies, with combined assets of £8bn (€8.9bn), have adopted a new ethical investment policy on alcohol following recommendations from its Ethical Investment Advisory Group (EIAG).
From now on, all producers and retailers deriving more than 5% of their revenues from alcoholic drinks will now be covered by the alcohol policy – meaning supermarkets are now in the firing line.
“The EIAG and the investing bodies concluded that it was wrong to bar investment in every producer of alcohol while ignoring the mass retail of low-cost alcohol by supermarkets,” a statement said.
The investing bodies – the Church Commissioners, the Church of England Pensions Board and the CBF Church of England Funds – have a combined holding of £86m in the major UK supermarkets, Tesco, Sainsbury, Morrison and Wal-Mart (owners of Asda)..
Debate is raging in the UK about the growth of a binge drinking culture fuelled by low prices; the Commissioners cite estimates that alcohol became 69.4% more affordable between 1980 and 2007 and figures that teenagers drink twice as much as they did in 1990.“Institutional investors don’t talk to the supermarkets about this and our old policy had no teeth because we couldn’t divest from a supermarket,” said EIAG chair John Reynolds. “We want to use our influence as shareholders to bear down hard on poor corporate practice and to encourage good practice.”
The former policy was to exclude from investment all companies deriving more than 25% from alcohol.
“The EIAG wishes to take a lead in using investor influence to promote responsible corporate practice,” the new policy states. It takes account of the increasing use of engagement over exclusion by ethical investors.
The EIAG was “very concerned” about the lack of investor engagement on the issue and plans to set minimum standards of corporate responsibility that it expects from companies selling alcohol. It will engage with those who fall short, with divestment the “ultimate sanction”.
The new policy will be implemented in partnership with church and charity asset management house CCLA.
The EIAG expects to make its first recommendations on which companies to exclude in 2013, although it acknowledges the policy will be “challenging to implement”.