Major CoE fund exits from fossil fuel investments

Source: Operation Noah

One of the Church of England's three National Investing Bodies, which is managed by investment management company: Churches, Charities and Local Authorities (CCLA) has recently sold its last remaining shares in fossil fuel companies.

CCLA, whose CBF funds manage investments on behalf of most Church of England dioceses and many local CoE churches, said it had dropped its investments in oil giants Shell and Total for financial reasons earlier this year.

It held shares in Shell and Total, worth an estimated £8.4 million, through the £1.5 billion CBF Church of England Investment Fund, the largest of the six CBF funds, and a smaller UK Equity Fund. The other four funds were already 'fossil free'.

According to DeSmogUK, which first reported the news, a spokesperson for the Diocese of Coventry explained that the funds no longer invested in fossil fuel companies 'on the basis of the financial risks posed by the short to medium term outlook for the oil and gas markets.' CCLA confirmed that they shared this view, telling DeSmog that the decision was made for investment, rather than ethical, reasons.

The last few months have highlighted the growing financial risk of fossil fuel investments, which is becoming unacceptable for prudent investors.

In December 2019, former Governor of the Bank of England, Mark Carney, when pressed on whether pension funds should divest from oil and gas companies, even if the returns were attractive, responded: 'Well that hasn't been the case (but they could make that argument). They need to make the argument, to be clear about why that is going to be the case if a substantial proportion of those assets are going to be worthless.'

CCLA, which also manages investments on behalf of Churches of other denominations, had previously sold its shares in BP and ExxonMobil for financial reasons.

Following the United Reformed Church decision to fully divest from fossil fuels in May 2019, Church investors approached CCLA to ask if they would offer a fossil free fund. ( See: https://brightnow.org.uk/news/ccla-fossil-free-fund/ )

CCLA subsequently announced that its COIF Charities Ethical Investment Fund would restrict investment in companies generating more than 10 per cent of their revenues from fossil fuels by December 2019. Announcing the decision in July 2019, CCLA highlighted the growing demand from clients who do not wish to invest in fossil fuels: 'Increasing numbers of charities view the extraction of fossil fuels as an inherently unethical activity.'

The Church of England General Synod in July 2018 voted to begin divestment in 2020 from oil and gas companies that are 'not taking seriously their responsibilities' in the transition to a low-carbon economy, and to complete divestment from those not on track to align with the Paris Agreement by 2023.

The Church of England's guidelines currently rule out investments in thermal coal and tar sands companies, but not oil and gas companies. A Church of England spokesperson reiterated that it would begin to divest from fossil fuel companies that are 'not taking seriously their responsibilities to assist with the transition to a low carbon economy' this year.

'We will divest by 2023 from fossil fuel companies that under the Transition Pathway Initiative assessments suggest the company is not prepared to align with the goals of the Paris Agreement,' they added.

As Bright Now's recent report (See: https://brightnow.org.uk/resource/church-investments-in-oil-paris-compliant-or-paris-defiant/ ) makes clear, with all major oil companies planning to significantly increase fossil fuel production in the next decade when global carbon emissions must halve by 2030, none of them can be considered as taking their responsibilities seriously.

James Buchanan, Bright Now Campaign Manager for Operation Noah, welcomed the decision taken by CCLA: "Fossil fuel investments are not only unethical, they are also a growing financial risk that investors are increasingly unwilling to accept.

"We urge CCLA to make this decision permanent by ruling out future investments in fossil fuel companies. Now is the time for Churches to support the green recovery by divesting from fossil fuels and investing in the clean technologies of the future."