Ethical Investment by Church of England

In addition to the important debate and approval of a motion on gender-based violence, the first day of the February 2014 General Synod received a presentation from the Chair and Deputy Chair of the Ethical Investment Advisory Group, EIAG, about its role and ethical investment. Although not accompanied by a formal paper, the main points are covered in the Press Release and the Explanatory Document to Wednesday’s Diocesan Synod Motion on Environmental Issues, GS 1942B.  Additionally there are audio links to the presentation and to the interview with the Deputy Chair, Reverend Canon Professor Richard Burridge.

As predicted by some commentators, the presentation received little press attention and on 11 February, the CofE’s Daily round-up of press coverage included only one link, to the article in The Guardian, “Church of England admits selling Wonga stake will take a ‘little while’: Chair of church’s ethical investment advisory group says communication failure led to embarrassment over payday lender”.

In terms of its total investments of £5.2bn, the £80k stake in Accel Partners, the US venture capital firm that led Wonga’s 2009 fundraising, is quite small.  The decision whether and when to sell Wonga will be made by the Church Commissioners, but James Featherby, the chair of EIAG indicated the complexity in doing so,

“To dispose early might damage other investments because Wonga is held in a pool fund along with a sizeable number of other, much more positive, investments, and one simply can’t sell one without the other.”

The Commissioners are also bound by UK Charity Law, and as trustees, the Commissioners are required to consider the financial interests of their beneficiaries, Harries (Bishop of Oxford) v Church Commissioners for England [1992] 1 WLR 1241, [1993] 2 All ER 300. Nevertheless, he urged the Church to take a positive view of both business and investment, stating

“being involved in the field of play, where our investments can support long-term, sustainable wealth creation for all stakeholders in society and where returns on investments increase the Church’s ability to fund its mission and witness”.

Whilst it was right that the Church should avoid certain investments and that there was no naivety as to potential problems, either systemically or within companies, Mr. Featherby argued that there was a need for engagement:

“investment portfolios will never be pure… Ethical ambiguity is intrinsic to life. We will graze our knees but this is better than disengagement – we need to be involved on the field of play, not on the side-lines. Engagement is important as we seek positive momentum not ‘perfection’”.

There are number of areas where active engagement with companies had led to changes in company behaviour, and during 2013, the Church of England’s National Investment Bodies, (NIBs)[1], voted directly on over 30,000 resolutions at 2,820 company meetings. There had been engagement with 42 different companies and also collaborative engagement through national and international initiatives. On the issue of executive remuneration the NIBs supported only 30% of UK Executive pay reports, rejecting the overwhelming majority on the basis of its policy on executive remuneration.

[1] Church Commissioners for England, Central Board of Finance, and Church of England Pensions Board.