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Church Commissioners bring in new human-rights criteria on investments

22 January 2024

Alamy

Participants in a Pride march in London, last July, call for the abolition of anti-LGBT+ laws in Uganda

Participants in a Pride march in London, last July, call for the abolition of anti-LGBT+ laws in Uganda

NEW investment criteria of the Church Commissioners in relation to human-rights abuses and social inequality are set out in a report that commits the Commissioners to holding companies to account on how they can “best understand and address their links to inequalities by meeting their responsibility to respect human rights”.

Agreed internally this month and published on Wednesday of last week, the report, Integrating Human Rights into Responsible Investment: A systemic approach to address systemic risks, seeks to “communicate to corporate management that the approach taken to respecting human rights is a financially material issue for all companies”. It is part of a collaborative initiative with Aviva Investors and Scottish Widows.

The Commissioners’ social-themes lead for responsible investment, Dan Neale, said: “During 2023, we worked towards a more systematic approach to human rights issues in our portfolio, with the aim of mitigating risks to broader society — and risks to long-term returns.”

Last year, revisions to the Commissioners’ Responsible Investment Framework guidance brought in sections specifically related to human rights for the first time. They are now the basis for engagement with asset managers on investment and due-diligence decisions.

In line with the UN Guiding Principles on Business and Human Rights, the Commissioners’ report affirms that “businesses — including investors — have a responsibility to respect human rights. This means they should avoid infringing on human rights and appropriately address adverse human rights impacts that they cause, contribute or are linked to.”

The Commissioners will seek to influence the decision-making of investors through a systematic voting policy, as well as calls to improve the quality of available data on human-rights positions and performance. They will also continue to set baseline criteria for company selection, which includes assessing the reporting standards and the performance of corporate management.

Where they become aware of negative or adverse investment decisions, or management failures in transparency and reporting, they will vote against them, or push for further clarification, the report says. Environmental, social, and governance reporting is now widespread, although has yet to become internationally consistent or regulated.

The report says that the Commissioners have not commissioned bespoke research on human-rights data across the whole portfolio, “which would be very costly”. Instead, they are seeking to improve the “human rights data environment”, and hope that their initiative will have a “catalytic effect in the wider market”.

The Commissioners have £10.3 billion invested globally. Of this, 70 per cent is either in or through the UK and North America, their Stewardship Report for 2022 says. A spokesman confirmed that no disinvestments had been made so far, and that “this is not a disinvestment initiative.”

The move, however, may set the Commissioners on a collision course with a number of Commonwealth member states and Anglican Communion nations where, for example, homosexuality is illegal and presents a touchstone human-rights issue. Last June, the Archbishop of Canterbury expressed “grief and dismay” over the Church of Uganda’s support for the Ugandan government’s Anti-Homosexuality Act (News, 12 June 2023).

The Archbishop of Uganda, Dr Stephen Kaziimba, rejected Archbishop Welby’s intervention as an expression of “opinions about matters around the world that he knows little about first-hand”. He also pointed to the Gafcon Kigali statement (News, 21 April 2023), which rejects the Archbishop of Canterbury as an Instrument of Communion.

The development also led the diocese of Bristol to review its decades-long link with the Church of Uganda, which included financial support (News, 02 August 2023).

The NGO Human Rights Watch considers LGBT rights to be “integral aspects of our selves [which] should never lead to discrimination or abuse”. Of the 63 countries that criminalise same-sex acts, 31 are in Africa.

Describing themselves as “a responsible investor”, the Commissioners consider that “climate change, nature loss and social inequality each represent systemic risks that will likely cause significant disruption to the economy, wider society and the financial system, in turn representing risks to our long-term investment goals.”

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