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Commissioners and Pensions Board take a scythe to their oil gas portfolios

22 June 2023

iStock

Storage tanks in Pervis, near the port of Rotterdam, in April

Storage tanks in Pervis, near the port of Rotterdam, in April

THE Church Commissioners and the Church of England Pensions Board are to remove Shell, BP, and other oil and gas firms from their investment portfolios, because they are not reducing their carbon emissions quickly enough.

The investment bodies were instructed by the General Synod in 2018 to disinvest from fossil-fuel companies by 2023 unless the latter could prove that they were on the path to tackling climate change, in line with the Paris Agreement (News, 13 July 2018).

The Commissioners, who manage a £10.3-billion endowment fund, announced on Thursday that they had “decided to exclude all remaining oil and gas majors from [their] portfolio, and will exclude all other companies primarily engaged in the exploration, production and refining of oil or gas, unless they are in genuine alignment with a 1.5°C pathway, by the end of 2023.

“In 2021, the Church Commissioners excluded 20 oil and gas majors from [their] investment portfolio. [They are] now also excluding BP, Ecopetrol, Eni, Equinor, ExxonMobil, Occidental Petroleum, Pemex, Repsol, Sasol, Shell, and Total, after concluding that none are aligned with the goals of the Paris Climate Agreement, as assessed by the Transition Pathway Initiative (TPI).”

The Archbishop of Canterbury, who chairs the Commissioners, said on Thursday: “We have long urged companies to take climate change seriously, and specifically to align with the goals of the Paris Climate Agreement and pursue efforts to limit the rise in temperature to 1.5°C above pre-industrial levels. In practical terms that means phasing out fossil fuels, investing in renewables, and plotting a credible path to a net-zero world. Some progress has been made, but not nearly enough. The Church will follow not just the science, but our faith — both of which call us to work for climate justice.”

The First Church Estates Commissioner, Alan Smith, said that the decision to disinvest had not been taken lightly. “Soberingly, the energy majors have not listened to significant voices in the societies and markets they serve and are not moving quickly enough on the transition,” he said. “If any of these energy companies come into alignment with our criteria in the future, we would reconsider our position. Indeed, that is something we would hope for.”

At the July meeting of the Synod this year, the Church’s investment bodies will make a presentation outlining the work that they have done to meet the Synod’s 2018 pledge.

Speaking at a press conference on Thursday afternoon, Mr Smith said: “While we have seen some companies taking significant steps forward, the hard truth is this: not enough progress has been made. This is ethical investing: protecting God’s creation is part of our mission.”

He continued, however: “This is also fundamentally about a hard-headed financial decision that protects our assets.”

Companies that “refuse to change course” would be “left behind as the world transitions to a low-carbon future”, he said.

The Pensions Board announced in a separate statement its “intention to disinvest from Shell plc and other oil and gas companies which are failing to show sufficient ambition to decarbonise in line with the aims of the Paris Agreement.

“The new investment restriction announced today will apply to all oil and gas companies that do not have short, medium and long-term emissions-reduction targets aligned with limiting global warming to 1.5°C, as assessed by the independent Transition Pathway Initiative. The exclusion will apply to equity and also debt investments.”

The Pensions Board’s chief executive, John Ball, said: “There is a significant misalignment between the long-term interests of our pension fund and continued investment in companies seeking short-term profit maximisation at the expense of the ambition needed to achieve the goals of the Paris Agreement. Recent reversal of previous commitments, most notably by BP and Shell, has undermined confidence in the sector’s ability to transition.”

Its chief responsible-investment officer, Adam Smith, said last week that the Pensions Board was “deeply unhappy” with Shell’s recent strategy, which, he said, “pulled back from the progress that had been made” (News, 16 June).

Christian Aid’s head of global advocacy, Jennifer Larbie, said that news of the disinvestment moves was “a damning indictment of the harm those corporations are doing to the world”.

She continued: “Over the years, the support of Church investors has emboldened oil and gas companies and given them the social licence and political capital to influence politicians around the world. That time has ended. . .

“It is telling that the Church of England, which has worked tirelessly to engage with the oil and gas industry and shift it on to a sustainable approach, has decided that these companies are beyond the pale.”

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