DESPITE the ongoing affects of the coronavirus on church and diocesan finances, the economic outlook of the Church of England is not approaching a cliff-edge, the chief executive of the Church Commissioners, Gareth Mostyn, has said.
Mr Mostyn, the former chief finance and operations officer for the National Church Institutions (NCIs), took up his appointment in February, a month before the pandemic hit the UK. Within two months, the Commissioners announced a £75 million liquidity package, and were able to pay the balance of nine months’ worth of grants to support dioceses and cathedrals through the lockdowns (News, 3 April 2020).
A “pivoting of direction” followed, Mr Mostyn said on Monday, just before the publication of the Commissioners’ annual report for 2020 on Tuesday. “With all the ups and downs of the past year, we were delighted with the investment performance we achieved. The 10.4 per cent returns enabled us to give that important flexible financial support to parishes, dioceses, and cathedrals last year, when all the financial implications first hit.”
He continued: “We’re even more pleased to be able to give reassurance that, because of the good, long-term performance, we can stay committed to the three-year funding plan of £930 million, despite the fact that the economic outlook in the medium term is not so positive. We’re giving a confident outlook to keep distributions at that level for the next triennium. The Church needs to know now there is no immediate cliff edge that is approaching.”
Responsible investment had further underlined the Commissioners’ commitment to using its position as a well known and responsible investor to make a difference to the planet and to people’s lives, Mr Mostyn said.
“We are absolutely committed to that. We are pleased that, with all the lobbying and engaging we did at the Exxon AGM [News 18 December 2020], its board is now made up of 25 per cent of the new directors we were wanting. It shows that even a fund of our size can make a real difference to the companies we invest in, and the global economy.”
The Commissioners have taken the first step towards the commitment made to the General Synod in 2018 that, by 2023, there would be no investment in any fossil-fuel companies that were not aligned with the Paris Agreement (News, 8 July 2018). Nine companies have since been restricted or removed from the investment portfolio (News, 18 December 2020).
Mr Mostyn said: “We will raise the bar every year, divesting where funding is already invested, or excluding from future investment where companies are not on track to be Paris-aligned. Basically, we either sell out or we don’t invest. . .
“We are passionate about making a difference to the planet, to people’s lives. But if we try to address every environmental need and every social need, we’ll never do it. So we pick where we will have the greatest impact. We are really focused to use our investment portfolio to drive real change in the global economy.
“I and the board want to see, not a net-zero investment fund, but a net-zero global economy. That’s why we engage in companies the way we do.
“It would be one thing just to exit those investments, but it wouldn’t change the carbon intensity of the world. We want to do all we can to address climate change.
“We’ve changed our voting policies for this year; we’ve been pushing for many years for us to be focused on gender equality; now our voting policy with companies looks at both gender diversity and racial diversity. We really want to do all we can to hold ourselves to account and not to be a hypocritical investor.”
Facebook and Amazon (News, 21 September 2018) are among the Commissioners’ top 20 holdings. Asked whether this investment in big tech presented a dilemma, Mr Mostyn cited a round-table meeting in September convened by the Archbishop of Canterbury, which brought the Commissioners and the Pensions Board together with influential people from the tech companies to explore ethical investment issues.
“We recognise that those companies do some amazing things that really benefit society — and that there are some more troubling things, and that’s where we are grateful to have advice.”
The priorities in the latest annual report are clear, notably a particular focus on large urban areas and support for children and young people. One of the key inputs to Strategic Development Funding — sometimes perceived to have a bias towards high-profile projects — will be the new Vision and Strategy report.
“Our mantra is ‘very long term’, so the work on Vision and Strategy is focusing on where we look to the next triennium,” Mr Mostyn said. “We are clear that we mustn’t make any funding decisions now which are at odds with that strategy.
“The fact is that, at the moment, the economic outlook is less healthy than it was a couple of years ago. All things being equal, there might be a need to cut our funding in the future; but we are confident that, save for some extreme event, we will be able to maintain distributions through to 2025.”
The Commissioners are working closely with the Archbishops’ Housing Commission on plans for new communities, as outlined in the commission’s first report (News, 26 February). “The Housing Commission set some key values, and we are absolutely behind those,” Mr Mostyn said. “We have in the order of 28,000 units of housing possible, and about 30 per cent of that will be affordable; but we’re also looking to how we can do more.
“The Housing Commission is looking to us to be innovative. We’re actively exploring whether land could be released for housing well as money.”
Mr Mostyn described the Commissioners’ objectives as both demanding and exciting. “The hardest thing is that there is always more that we are asked to do and need to do than we are able to do,” he said. “When it comes to funding or investing in a responsible way, we will never be able to do enough, so we are committed to doing all we can.
“The Church Commissioners are here for the Church of England, the dioceses and parishes, the cathedrals. The Church Commissioners are not here for themselves. It’s not just about making the most available this year that we can, but about next year, and the year after that, and the year after that. It’s really hard to do when you know there’s more demand than there is supply.”
Read our story on the Commissioners’ annual report 2020