THE Church Commissioners announced on Friday that they have
successfully extracted themselves from their financial stake in
Wonga, the payday lenders criticised last July by the Archbishop of
His criticism of Wonga for charging vulnerable people high rates
of interest (26 July
2013) was undermined by the revelation that the C of E had a
financial stake in the company, albeit an indirect one through a
venture-capital portfolio holding.
The nature of a portfolio investment is that it is viritually
impossible to alter the terms during the period of one's
investment. In Friday's announcement, the Church Commissioners
stated: "The Church Commissioners estimate that, if they had had to
sell their entire venture capital holdings, they might have lost
£3-9 million to remove the exposure to Wonga, which was worth less
The announcement went on: "The Commissioners are pleased that
another way forward has been agreed, given their fiduciary duties
to clergy pensioners and to all the parts of the Church they
support financially." It also makes it clear that the Commissioners
have ensured that they have made no profit from their indirect
holding in Wonga. The nature of the deal, remains confidential, but
it is said to be unusual.
In its recent annual report, the Ethical Investment Advisory
Group explained: Pooled funds are often the only way to access
certain asset classes and investment strategies - including venture
capital, which can not only increase financial returns for
investors but also serve society." The Wonga exposure had arisen in
a pooled fund, "which could not be screened in the way that direct
holdings are screened".
It is believed that, by declining to take any profit from their
Wonga holding the Commissioners have signed away a five-figure
Edward Mason, newly appointed Head of Responsible Investment at
the Church Commissioners, said on Friday that having an ethical
approach to investments came at a potential cost. "It is calculated
that, in recent years, the ethical investment policy has cost the
Commissioners about 0.2 per cent in lost profits annually. This
might not seem much, but, given the size of the Church's
investments, we forgo several million pounds a year by having such
strict exclusions about what we will invest in.
"It's a balancing act, given our responsibility to fund clergy
pensions and other church activities, and we monitor it very
closely, but it is the right thing to do."
When the Wonga holding was revealed last July, Archbishop Welby
admitted that he was "embarrassed" and "irritated" by the news. The
Archbishop has no direct control over the Church's investments -
the responsibility of the Commissioners' assets committee - but it
is known that he has been putting pressure on them in recent
In an interview for the BBC's Andrew Marr Show, to be broadcast
on Sunday, he said: "I have been absolutely clear that I do not
believe that the rates of interest charged by these companies are
ethical and moral - they are legal but they are not ethical or
"I can obviously apply pressure, encouragement, and I've tried
to do that. I'm absolutely delighted that we are now out of Wonga
and have taken no profit from it."
Correction: in our story about the EIAG annual report (4 July), we stated
that the EIAG was defending the holding in Wonga. We accept that
this was a misrepresentation of the report's general defence to the
EIAG's approach to ethical investment. Direct investments can be
used to improve the ethical practices of the companies invested in.
This is not the case with indirect investments through pooled
funds. We apologise for the error.