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Church Commissioners under fire again over fuel policy

25 February 2022

Campaigners point to finance officers’ links to oil industry

Pensions Board

An image from the Pensions Board Annual Review, overlaid with a quotation from the Archbishop of Canterbury: “Companies and businesses can be powerful tools for social good when they have ethical systems built in which encourage people to do the right thing, when they value people-centred profits and when they seek relationships of covenant, not just of contract”

An image from the Pensions Board Annual Review, overlaid with a quotation from the Archbishop of Canterbury: “Companies and businesses can be powerful...

PRESSURE is mounting on the Church Commissioners and the C of E Pensions Board to withdraw the rest of their funding from fossil-fuel companies, after an investigation into historic ties between the Church’s finance chiefs and oil and gas companies.

The environmental-investigation group DeSmog has highlighted the fact that senior figures overseeing the Church’s investments have worked with some of the most polluting companies in the world, including Shell, BP, and Drax.

This comes as 136 members of the clergy, including several bishops and one former Archbishop of Canterbury, Lord Williams, have written to the Church Times this week calling for the Commissioners to disinvest immediately from the oil giant ExxonMobil (Letters, page 16).

Their intervention follows a letter to the Editor (4 February) from members of the Young Christian Climate Network, expressing their “deep concern and anger” at the Commissioners’ decision not to put ExxonMobil on its “restricted list” of companies because three new activist board members were added last June.

In their letter this week, the clergy write: “Despite these changes, there does not appear to have been any progress. Earlier this month, it was reported that Exxon plans to increase capital spending on oil and gas drilling up to 45 per cent in 2022 to $24 billion, higher than pre-pandemic levels.

“Unfortunately, despite years of shareholder engagement, Exxon has continued to undermine action on the climate crisis. Last June, a senior ExxonMobil lobbyist was caught on camera revealing that the company was working behind the scenes to water down climate legislation in the US.”

They point out that several other institutional investors, such as the Presbyterian Church (USA), and the UK’s largest pension scheme, Nest, have recently disinvested from Exxon.

Campaigners have long called for the Commissioners to divest because, as a perceived ethical investor, the Church has the power to remove a company’s social licence and ability to wield political influence, particularly in the US.

In 2018, the General Synod voted to disinvest from all oil and gas companies that were not in line with the Paris Agreement by 2023. Yet the Church continues to hold shares in Shell, TotalEnergies, and ExxonMobil, all of which are planning significant fossil-fuel expansion. This is despite the International Energy Agency’s warning that no new fossil-fuel reserves can be exploited if the Paris Agreement goal of limiting global average temperature rise to 1.5ºC is to be met.

The Archbishop of Canterbury’s decade working in the oil industry before ordination is well known, but DeSmog has also pointed out that Clive Mather, who was elected chairman of the Pensions Board in 2019, is the former chief executive of Shell Canada, and oversaw the company’s expansion into highly polluting oil sands before his retirement in 2007.

Richard Hubbard, who chairs the board’s pensions committee, worked for BP for nearly 30 years, retiring from his position as director of BP’s European cross-border pension plan in 2020.

David Nussbaum, a member of the Ethical Investment Advisory Group (EIAG), which provides guidance for all of the Church’s investing bodies, is a director of Drax. Drax used to be the UK’s biggest coal-fired power plant, and is still the UK’s single largest source of carbon-dioxide emissions, now burning trees instead of coal.

Others with less direct links include the First Church Estates Commissioner, Alan Smith, who is a former head of risk strategy at HSBC, the bank that has financed more than £81 billion in fossil fuels since the Paris Agreement was signed in 2015.

Dami Lalude, another member of the EIAG, previously worked at Goldman Sachs, spending time in its Natural Resources Group, which covers fossil fuels. The bank has financed the fossil-fuel industry to the tune of more than £73 billion since the Paris Agreement, and, according to campaign group BankTrack, was still financing coal-fired power as of 2020.

DeSmog does not allege any malpractice at any of the national investment bodies. But the Rector of All Saints’, Ascot, the Revd Darrell Hannah, who chairs the climate charity Operation Noah, and is one of the letter’s signatories, feared that the Church’s engagement strategy, along with that of other investors, was being undermined.

“We are deeply concerned by the Church of England National Investing Bodies’ ties to the fossil-fuel industry, which raise significant questions around conflicts of interest. How can the board continue to lead engagement with Shell, on behalf of Climate Action 100+, when the chair of the pensions board is the former CEO of Shell Canada?”

A spokesperson for the Church of England defended their position: “The Church of England’s National Investing Bodies have taken the view that they have more influence on high-carbon industries by being in the room rather than by disinvesting. By engaging with high-carbon-emitting companies, we can address the climate crisis and bring about real-world change.

“Our engagement is not open-ended, and we are explicit in our expectation that we will disinvest from companies that are not responsive to engagement.

“It is not a surprise that we want experts from industry and finance on our governance bodies to help us make the right decisions. Our board members and their backgrounds are a matter of public record and readily available online. They operate to the highest ethical and responsible investing standards. They sit alongside other board members from a variety of backgrounds, including Church and other third-sector experience.

“Calling out these individuals incorrectly suggests that the Church’s decisions are somehow influenced by those associations.”

The spokesperson continued: “The strategy is making significant progress, with 20 companies having agreed to make climate-related changes to stay off our restricted list since 2020, and a further 28 companies were excluded from our investment list on ethical grounds last year. We want to achieve a net-zero world, not only a net-zero investment portfolio.”

Mr Hannah, however, called for the finance chiefs to consider their position. He said: “Why did the Pensions Board support Shell’s energy transition plan, which includes a 20-per-cent gas-production increase in the next few years? Christians with strong financial ties to high-polluting companies are clearly compromised in taking the urgent action now needed against those companies. We urge Clive Mather and others to reconsider their position.”

Letter, page 16

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