THE Church Commissioners disinvested, on ethical grounds, from greater than 800 corporations last 12 months, including, they report, 133 corporations that failed to have interaction with them over connections with Russia.
The figures are set out of their latest stewardship report, An Ethical and Responsible Approach, published last week. It is ready annually to fulfill the reporting obligations of the UK Financial Reporting Council’s Stewardship Code and the Principles for Responsible Investment.
The total endowment fund was valued at £10.4 billion at the top of 2023 — up from £10.3 billion at the top of 2022 (News, 2 June 2023). The report covers the primary 12 months of the 2023-25 triennium, wherein the Commissioners have committed themselves to distributing £1.2 billion in support of the Church’s mission — a rise of about 30 per cent on the previous triennium (News, 7 June).
“We are doing so against a backdrop of serious global economic and geopolitical uncertainty, and an accelerating climate crisis,” the First Church Estates Commissioner, Alan Smith, writes in his foreword to the report.
In 2023, the Commissioners announced that they might disinvest from fossil-fuel corporations because, after a decade of engagement, none had, at the moment, aligned itself with the goals of the Paris Agreement (News, 23 June 2023).
The Commissioners excluded 844 corporations from their direct investments in 2023 on ethical grounds, the report says — up from 435 the previous 12 months. These included corporations that failed to have interaction with them on issues related to climate change (248 corporations), alcohol (124), gambling (116), defence (104), and tobacco (68).
The significant increase (94 per cent) is due partially to the Commissioners’ expanding the scope of their climate restrictions, the report says, and the addition of 113 corporations excluded for “special reasons” — “criteria including failed engagement following a norms-breach controversy and being domiciled in Russia”.
Every quarter, the Commissioners screen their public-markets portfolio for breaches of international norms and human rights. “Where issues are identified, we aim to have interaction with the businesses, either directly, via our managers, or via our third-party engagement provider,” the report says. “Where a satisfactory consequence just isn’t going to be achieved via engagement, we are going to consider disinvestment.”
Most of the 489 direct engagements with 417 corporations in 2023 were with corporations based in North America (46.9 per cent) and Europe (37 per cent). The two fundamental topics of engagement were environmental (51 per cent) and social (49 per cent). Of environmental engagement, 50 per cent related to climate change, 41.8 per cent to biodiversity, and five per cent to deforestation. Of social concerns, 54.2 per cent related to human rights, 42.6 per cent to mental health, 2.8 per cent to responsible technology, and 0.2 per cent to modern slavery.
The Commissioners solid 13,346 votes in 2023; 95 per cent were management resolutions, of which they voted against, or abstained from, 22.7 per cent.
Most of the Commissioners’ assets are in North America (40.1 per cent) and the UK (31.1 per cent). Most are in public equities (30.1 per cent), absolute returns (11.1 per cent), private equities (9.5 per cent), and defensive equities (six per cent).
Mr Smith writes: “The Church Commissioners, as an in-perpetuity faith-based endowment investor, must take the long view, allocating capital with a watch on intergenerational equity. So we must know our past to grasp our present.”
In 2023, this included pledging £100 million to mitigate the long-term consequences of the transatlantic slave trade, with which the Commissioners had identified a link, reported that very same 12 months (News, 13 January 2023).
“That shameful truth — that we were involved within the profoundly immoral act of treating our fellow human beings as chattel, as property in pursuit of corporate returns on investment — made us reflect on how we, as an ethical and responsible investor, should act, looking ahead, to construct a greater future,” Mr Smith writes.
