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Opinion >

The argument against fossil fuels

The Church must practise what it preaches, and disinvest now, says Michael Northcott

PA

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Coal-fired: Fiddlers Ferry power station, near Warrington

Credit: PA

Coal-fired: Fiddlers Ferry power station, near Warrington

THE General Synod will debate a motion next week from the Southwark diocesan synod, which acknowledges the damage being done to the planet by the burning of fossil fuels, and the part played by investment funds, including those of the Church of England, in financing fossil-fuel extraction. It calls on the C of E's national investment bodies to "align their investments" with the Church's public statements on climate change and ecological responsibility.

The motion reflects pressure on the Church Commissioners from climate activists and Christian organisations, such as Christian Aid and Operation Noah, to disinvest in fossil-fuel stocks and shares.

What the Carbon Tracker Initiative calls "unburnable carbon" is the focus of the disinvestmentcampaign of a range of activistsand academics. UK stock-market values, on which Church of England pensions and other investmentsrely for income and capital growth, include a "carbon bubble" of fossil-fuel reserves in the share valueof companies such as Exxon, Shell, and BP. If burned, such reserves would contribute to warming the planet by 4-6° in this century.

 

IN THE 1980s, church and university trustees in the United States were the lead groups in disinvestment actions. But disinvestment campaigns are often criticised as ineffective. Stocks sold by concerned investors remain on the market, and the small drop in demand from a select group of investors is arguably insufficient to lower their value significantly.

A new study, however, from the Smith School of Enterprise and the Environment at Oxford University, examines stranded assets, and suggests that disinvestment campaigns have a good record of provoking social change. Church disinvestment in South Africa played a crucial part in ending apartheid. Similarly, disinvestment in tobacco companies facilitated a larger cultural shift away from smokingin the United States and Europe.

Although the amounts divested are initially small, divestment raises public awareness, so that investment in the stocks becomes socially unacceptable, and larger investors, including cities and other public institutions, sell them, leading to a collapse in their value.

The Oxford stranded-assets report says that, in the US, religious investors led secular investors on ethical investment, in ways that influenced the mainstream, including attitudes to South Africa under apartheid, to tobacco, and tothe arms, adult-entertainment, and gambling industries.

A similar trajectory on ethical investment is evident from a 1992 legal case between the then Bishop of Oxford, the Rt Revd Richard (now Lord) Harries, and the Church Commissioners.

Acting on behalf of the Oxford diocesan synod, Bishop Harries obtained a judgment from the High Court that trustees were permitted to include ethical considerations in investment decisions, and in particular to avoid investments in enterprises which trust beneficiaries may believe were immoral, such as armaments' manufacture, provided that such avoidance did not harm financial performance.

The judgment by Lord Nicholls opened the way for a greater focus on ethical considerations, not only by the Church Commissioners, but by other trustees who had previously followed legal advice that their duties to maximise investor returns were greater than duties that they or their beneficiaries might believe that they had to avoid investments in activities that caused harm to people or the planet.

After the High Court ruling,the Church of England established an Ethical Investment Advisory Group (EIAG), which has recently been lobbied by Christian climate and environmental groups. These groups are pressing the Church ofEngland to lead UK investors indisinvesting in unburnable carbon.

The Church Commissioners have, however, so far proved resistant to such pressure, and EIAG itself put out a questionnaire on the topic in December 2013, which included a number of leading questions that suggest that the EIAG does not believe that the C of E ought to play a leading part in prudential investment decisions on unburnable carbon (News, 13 December; Letters, 20/27 December).
 

THE move for disinvestment in carbon reserves held on world stock markets is given added scientific weight by two recent publications. The first is the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) (Comment, 27 September; News, 4 October).

For the first time, the IPCC published an estimated budget of the carbon that can be burned before committing the earth to morethan two degrees of anthropogenic warming since the industrial revolution. The carbon-budget approach represents the scientific case that world stock markets must find mechanisms to remove carbon reserves from stock-market valuations, and so prevent these reserves from being extracted.

The second publication is a paper published by Richard Heede in the journal Climatic Change last month, which reveals that two-thirds of greenhouse-gas emissions since 1850 have emanated from the activities of just 90 investor- and state-owned corporations.

As Dr Heede says, the United Nations focuses efforts to create a global treaty that would limit damage to the atmosphere on the emissions of nation states. But this approach ignores the liabilities of those entities that are primarily responsible for greenhouse-gas pollution: these are not nation states, but oil, coal, natural-gas, and cement companies.

There is no point in nation states agreeing to limit their terrestrial emissions from fossil-fuel burning - which, in any case, the UN treaty process indicates that they are unwilling to do - if corporate entities continue to receive tax breaks and other incentives to go on extracting fossil fuels. Fossil fuels that are extracted and marketed will be burned.
 

COAL is the first and clearest example where evidence is already emerging that its future use may become socially unacceptable. The reason for this is not, however, the UN climate-treaty process and related failing carbon markets, but the unambiguous, visible, and scientifically documented evidence of the harmful effects of coal on human health, including on babies in the womb.

Coal causes human suffering on a vast scale. The United States is now following Europe in reducing dependence on coal on health grounds, and even China is talking about reducing its heavy reliance on coal, because of life-threatening pollution across swathes of the country.

As a result of this, coal-company stocks are already being written down, and dropped by some investors. Yet the negative human-welfare impact of other fossil fuels are invisible, and rely almost entirely on calculations of intergenerational and interspecies harms from climate change.

 

THE UN global climate-treaty process is broken, and is unlikely to be fixed. This is, in part, because the process misidentifies the real source of the problem, which is not emissions, but extraction.

No national government has yet shown itself willing to resist the financial flows that come from licensing fossil-fuel extraction within its sovereign territory, despite the known risk of large-scale and irreversible future harm from fossil-fuel emissions.

Energy companies will not write off fossil-fuel reserves, or invest significantly in non-fossil fuel energy and carbon capture and storage, until stock market conditions require them to do so.

All of this means that church and other charitable and public investors may have great influence on the future of the planet, greater even than governments and the United Nations.

The moral case for disinvestment in coal, oil, gas, and biodiesel from oil-palm plantations, is clear. Given the nature of energy markets, extraction of the resources and investment in extraction has much greater influence on energy price than consumer behaviour.

A small minority of consumers, who choose to buy wind power or not to fly, have little influence on energy production because, once extracted and marketed, fossil fuels are burned. But a small minority of investors who disinvest in fossil-fuel stocks can have enormous influence on energy markets, since they can influence the behaviour of the makers of these markets, who are the corporations which extract and market energy.
 

THE General Synod therefore has a momentous decision to make next week. It was Benedictine monks in Tyne and Wear who were the initiators of that process of coal extraction which made Britain the lead historic nation in fossil-fuel extraction, industrial production, and hence in the unwitting causation of global warming.

Future historians might be able to look back to the General Synod vote, and the subsequent decision of the Church Commissioners to disinvest in fossil-fuel stocks, as equally momentous. The Church of England could lead other investors in repairing what the monks began.

The success of Christian investors in leading change in stock markets on immoral investments in arms and apartheid is analogous to the rising influence of fair trade in retail marketing, and in moves towards ethical consumption. Both are strong evidence of the power of Christian Messianism, and of Christ's teaching and example on the moral priority of the relief of suffering, to influence the secular world, even when church-going numbers have declined.

They reveal the enduring moral and spiritual force of a morally charged Messianic minority to "turn the world upside down", just as did the early Christians in the first centuries. Messianism is all about political hope: Christ changed history for all time, as the suffering heavenly King who served the weak and saved the world. In the climate crisis, Christian investors should follow him, and do likewise.
 

The Revd Dr Michael Northcott is Professor of Ethics in the University of Edinburgh. His latest book,

A Political Theology of Climate Change, is published by SPCK this month.

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