THE Church Commissioners are now able to invest in defence companies in certain countries, after a policy change announced on Tuesday.
Previously, the Commissioners were barred from investing any of their £11.1-billion endowment in a company that made more than ten per cent of its global revenue from “strategic military sales”.
A statement on Tuesday said that the new policy allowed for a “more nuanced assessment of what companies actually do”, but emphasised: “The bar to investing in defence businesses will remain high.”
Companies that produce “controversial weapons”, such as cluster munitions, chemical weapons, and anti-personnel mines, remain “strictly excluded” under the new policy, regardless of where they are based.
Companies based in “oppressive regimes” are also now completely excluded from potential investment, irrespective of the proportion of revenue that comes from arms sales.
The policy allows the Commissioners to invest in UK-based companies that make the majority of their revenue from selling military weapons systems, or small arms and ammunition for military and law enforcement.
It also allows companies involved in the production of nuclear weapons to be reclassified as “investible” case by case, provided they are based in a NATO country, or Canada, Australia, or New Zealand.
The Commissioners’ social lead for responsible investment, Dan Neale, told the Church Times that this was not a “back-door route” to investment in nuclear weapons.
Rather, he said, the approach allowed the Commissioners to judge whether a company with a “non-essential” involvement in the chain of supply, such as making a small proportion of its revenue on non-essential equipment used in nuclear submarines, should be excluded from potential investment.
Tuesday’s statement said that the updated policy on defence investments “does not represent a loosening of restrictions, but rather a sharpening of the criteria we use to evaluate potential investments — the aim being to ensure a more rational, responsible approach aligned with our human-rights policy and focused on ethical business conduct”.
The new approach, it said, “makes it harder to invest in companies linked to oppressive regimes, while enabling responsible investment in NATO and UK defence related business”.
The Church Commissioners do not publish a list of the countries that they classify as “oppressive regimes”, but define them as governments that are “significantly failing to protect and respect human rights”.
A spokesperson for the Commissioners would not confirm whether Israel was regarded as an “oppressive regime” for the purposes of the policy.
Last month, the Archbishop of York branded Israel’s actions in the occupied West Bank “apartheid” and “ethnic cleansing”, and said that Israel had committed “genocidal acts” in Gaza (News, 21 November).
The Commissioners’ new policy focuses on where a company is domiciled rather than where it sells its wares. Mr Neale explained that where products were sold would be a factor in decisions whether to invest, but that it was impossible to design an automatic exclusion on this basis because of a lack of real-time data.
The most permissive approach applies to UK-based companies, and different rules apply to countries that are in NATO and the “Five Eyes” alliance of the UK, United States, Canada, Australia, and New Zealand.
More restrictions apply to companies based in countries outside these alliances, broadly in line with the previous policy of excluding companies that derived ten per cent of their revenue from defence sales.
The exception to this is a category “non-weapon-related products and/or services”, which could, for example, include companies that provide catering at army bases.
The Commissioners’ new policy follows the publication last week of updated advice from the Ethical Investment Advisory Group, which provides guidance to the Church of England’s National Investment Bodies (NIBs).
The other main NIB, the Church of England Pensions Board, had not, by Thursday, released an updated policy.