Church of England: full divestment from SOCO

Further to our post Climate change, the Archbishop and the Pope in which we highlighted the lead being given by the Church’s National Investment Bodies, we note that this morning the CofE has issued the following announcement of its full divestment from SOCO. This follows the announcement on 15 February this year EIAG issues statement on Church Commissioners and Pensions Board holding in SOCO stated:

“The Church of England Ethical Investment Advisory Group (EIAG) has issued a formal statement relating to the holdings of the Church Commissioners and Pensions Board in SOCO International Plc.

Following Board level engagement between the Church of England Ethical Investment Advisory Group (EIAG) and SOCO International Plc (SOCO), the EIAG has raised serious concerns about the Company’s determination to satisfactorily address, in an open and transparent manner, allegations concerning the operations of SOCO in and around the Virunga National Park in the Democratic Republic of Congo (DRC).

These allegations are of a serious nature and require a response from the Board that urgently seeks to restore the confidence of shareholders.  We find the efforts of the Company to date have not been sufficient.

[…]

The EIAG will continue to monitor the company’s activities and to engage with the Board.”

This has been followed up with today’s announcement:

“The Church Commissioners for England announce full divestment from SOCO

01 July 2015

The Church Commissioners for England are today announcing full divestment from their holdings in SOCO International to the total of £1.6 million and the company has been notified. The decision to divest follows the recommendation from the Ethical Investment Advisory Group of the Church of England and extensive and sustained engagement with the company.

The EIAG commenced engagement following a series of allegations of human rights abuses, bribery and corruption related to SOCO International’s operations in and around Virunga National Park in the Democratic Republic of Congo.  The Church Commissioners and the Pensions Board have persistently raised concerns with SOCO International and its board since November 2013, with engagement intensifying since December 2014. In the course of this period, concerns have specifically addressed four main areas. Namely the need for the instigation of a wide ranging and transparent independent enquiry addressing the allegations of bribery, corruption and human rights abuses, the lack of independent and effective corporate governance, the adoption of best practice, internationally recognised, environmental and social standards and unequivocal respect for park boundaries within a World Heritage Site.

Adam Matthews, Secretary of the Ethical Investment Advisory Group, who has led on engagement with SOCO International and attended the recent AGM, said: “We are deeply concerned about the failure of SOCO International to properly and fully address our four concerns, in particular to ensure that an open and transparent enquiry is held into the allegations of corruption and human rights abuses. At the recent AGM we asked the board to urgently consider the appointment of an independent Chairman to ensure SOCO could finally openly and transparently address the concerns of shareholders. The response of the Company that has emerged from our engagement and crystallised at the AGM has led us to recommend full divestment.”

Edward Mason, Head of Responsible Investment at the Church Commissioners said: “We have called time because without the changes we sought this is not a sustainable or ethical investment for Church funds. We take engagement with companies very seriously. In this instance SOCO has not responded positively or sincerely to the concerns we have raised. The lack of appropriate corporate governance was clear at the AGM and left us nowhere to go but full divestment. The company has been placed on our restricted list with immediate effect and all our investment managers have been notified.”

Ethical Investment Advisory Group concerns

An Independent Enquiry:

Instigation of a wide ranging and transparent independent enquiry of SOCO’s operations in and around Virunga National Park (specifically addressing the allegations of corruption, bribery and human rights), including the publication of the enquiry scope, outcome and confirmation of any resulting actions.

Park Boundaries:

Amendment of the previously issued statement agreed between SOCO and WWF to remove any room for doubt about SOCO’s intentions within existing or future boundaries of a World Heritage site so that there are, without exception, no circumstances in which SOCO would conduct further exploration or production activities in the Virunga National Park or any other World Heritage site.

Best Practice Standards:

The adoption of best practice environmental and social standards. We remain concerned that the company’s management policies still do not include a commitment to comply with the UN Guiding Principles on Human Rights and that the company is not a participant in the Voluntary Principles for Security and Human Rights.

Corporate Governance:

A commitment to address concerns relating to the company’s corporate governance, including but not limited to the independence of the chairman.

About The Church Commissioners

The Church Commissioners manage an investment fund of £6.7 billion, held in a diversified portfolio, including equities, real estate and alternative investment strategies. The Commissioners’ work supports the Church of England as a Christian presence in every community. The annual objectives of the Church Commissioners include:

  • Supporting ministry costs in dioceses with fewer resources
  • Providing funds to support mission activities
  • Paying for bishops’ ministry and some cathedral costs
  • Administering the legal framework for pastoral reorganisation and settling the future of closed church buildings
  • Paying clergy pensions for service prior to 1998
  • Running the national payroll for serving the retired clergy”

Comment

The current divestment is a clear example of the Church’s “decisive, moral leadership”, an issue that has been criticized in Jonathon Porritt’s blog Can Archbishop Welby (a Former Oil Man) Rise to the Pope’s Challenge? Whilst not concerning climate change per se, it does demonstrate  action against an oil and gas exploration company. The Guardian reports that this is the third time over the past five years that the Church has divested from a company on ethical grounds: in 2012 it sold its shares in News Corporation in protest at phone-hacking and in 2010 it sold its holdings in Vedanta Resources over human rights concerns linked with the company’s mining operations India.

This action contrasts with yesterday’s report in Anglican Ink Light green investing endorsed by US Episcopal bishops. At its meeting on 28 June 2015 at the Salt Palace Convention Center in Salt Lake City, the bishops debated the Resolution C045 “Environmentally responsible investing” offered by the Diocese of Massachusetts. Although the House of Bishops of the Episcopal Church endorsed a resolution calling upon the church to divest its shares in fossil fuel stocks, it excluded the Church Pension Fund from the green investment agenda.

Cite this article as: David Pocklington, "Church of England: full divestment from SOCO" in Law & Religion UK, 1 July 2015, https://lawandreligionuk.com/2015/07/01/church-of-england-full-divestment-from-soco/

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