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Church Commissioners and ethical investment

by
20 June 2014

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From Mr Simon Court
Sir, - The Church Commissioners have celebrated the "best" results for their investment fund in eight years. (News, 30 May). We are told that, after Government Treasury Bonds, their next biggest stock-exchange holdings were in Royal Dutch Shell, Vodafone, HSBC, and BP. So much for ethical investment!

It is bad enough to have substantial investments in a bank that has recently paid hundreds of millions in fines to US regulators for money laundering and in a company that saved billions of tax in a sweetheart deal with HM Revenue and Customs. Worse still are the large holdings in oil companies.

Archbishop Desmond Tutu said recently that "it makes no sense to invest in companies that undermine our future." He encouraged people of conscience to "break their ties with corporations financing the injustice of climate change". Churches in the UK, led by Operation Noah, are leading the way on fossil-fuel divestment.

The idea behind divestment is quite simple really. If we want to stop climate change, then we need to stop burning fossil fuels. Serious climate scientists agree that if we emit 565 gigatonnes of carbon dioxide, then there is a chance that global warming will stay below 2°C. The bad news is that fossil-fuel companies and fossil-fuel-rich nations have current reserves of around 2795 gigatonnes already. This means that we not only have to stop looking for more (no more fracking), but also leave 80 per cent of reserves in the ground to have a chance of staying within two degrees of warming.

The Church Commissioners should be finding something less risky and more ethical to invest in than fossil fuels. Instead, they pat themselves on the back and award a £90,000 bonus to their highest-paid employee.

The General Synod has made clear its desire that the Church's National Investing Bodies continually ensure that their investment policies are "aligned with the theological, moral and social priorities" of the Church on climate change.

There is so much that we can all do to tackle climate change by reducing our carbon emissions. The Church Commissioners need to divest themselves of their fossil-fuel investments now.

SIMON COURT
Eastgate Cottage
Perrys Lane, Cawston
Norwich NR10 4HJ


From Mr Matthew Jones
Sir, - As the co-ordinator of the Methodist Tax Justice Network, I was interested to read in the Church Times (News, 23 May), and in the Independent article quoted, that Edward Mason, of the Ethical Investment Advisory Group, praised the efforts of Glencore-Xstrata with regard to improving their environmental standards.

Undoubtedly, if what Glencore-Xstrata's chairman had to say about the improvements being made to the Mopani smelter in Zambia was true, then this is a positive step for a company that has been dogged by numerous reports of environmental contamination. Before patting this corporation on the back, however, should not Mr Mason and the EIAG consider its record of avoiding paying its taxes in developing countries?

Since buying the Mopani Copper mine in Zambia in 2000, Glencore (and subsequently Glencore-Xstrata) has been exporting Zambian copper at well under its market value to its headquarters in Switzerland. From here, it has then been selling it on again (usually to its own subsidiaries) at more than the market price. This is a classic example of transfer mispricing in order to lower its tax bill in Zambia and maximise its profits in low-tax Switzerland. It has also under-reported profits and over-inflated its operating costs, and as a result pays almost no corporation tax in Zambia.

Glencore-Xstrata also uses a complex tax-avoiding structure to avoid paying tax in the Democratic Republic of Congo: the ownership of Kamoto Copper Company is split between tax-haven-based holding companies in the British Virgin Islands, Guernsey, the Isle of Man, and Yukon Territory in Canada. The Revd Peggy Mulambya Kabonde, General Secretary of the United Church of Zambia, has said that "Increasing the tax we get from international trade will allow the government to reduce inequality among the people of Zambia." Our leaflet on this issue can be downloaded from our website at http://methodisttaxjusticenetwork.nationbuilder.com/resources.

We would welcome further dialogue with Mr Mason and the EIAG on this issue, as tax justice is fast becoming one of the most important ethical issues in modern finance.

MATTHEW JONES
Co-ordinator, Methodist Tax
Justice Network
1 Park Mews, Selly Oak
Birmingham B29 5JQ

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