15

Dec

2014

The Church of England threatens to pull its investments from BP and Shell unless they take action to address climate change

 

Following the Church of England’s recent announcement that it will file two shareholder resolutions at the BP and Shell AGMs in 2015, the Church stated last week that it will consider disinvestment from these companies as a ‘last resort’ if they are unresponsive to the Church’s concerns.

Can the Church of England use its investments to change the business strategies of fossil fuel companies, or should it follow other Churches around the world in refusing to profit from, and provide finance to, the fossil fuel industry?

Under pressure from Christian campaigners to disinvest, the Church of England is pursuing an engagement strategy to encourage BP and Shell to take account of climate change. The Church is now filing two shareholder resolutions asking for information concerning the companies’ rating under the Carbon Disclosure Project’s Climate Performance Leaders Index (CPLI), their resilience to the International Energy Agency’s post-35 scenarios, and their investment in low-carbon technology including Carbon Capture and Storage (CCS).

Operation Noah is pleased to see the Church considering these issues. However, we believe the Church must go further. We would like to know what criteria the Church of England will use to determine the effectiveness of their engagement, and the point at which a decision to disinvest would be taken. As fossil fuel companies continue to explore and extract ever-increasing amounts of fossil fuels while our window of opportunity to prevent catastrophic climate change grows smaller, when will it be time for the Church to use its ‘last resort’?

Churches from around the world are increasingly concluding that engagement will have little effect on the behaviour of a fossil company, choosing instead to disinvest. In total, 49 Churches have now disinvested for both ethical and financial reasons, electing to use their funds to support clean technology alternatives such as renewable energies. Gunnela Hahn, Head of Responsible Investment at the Church of Sweden, which made its $691 million portfolio fossil free in October, said:

‘We do not want to own, and thereby fund, the extraction of fossil fuels. Instead we want to own and fund companies that stand for solutions. Furthermore we see a financial risk in owning fossil fuel companies. Their value consists to a large extent of fossil fuel reserves that risk losing value, since they cannot be extracted if we are to have a liveable planet.’

Other fossil free Churches include the World Council of Churches, Quakers in Britain, the Uniting Church in Australia, the Presbyterian Church in New Zealand and the United Church of Christ in the US.

There is no evidence as yet that BP or Shell feel any pressure from their investors to move away from fossil fuel extraction. In Shell’s Strategic Report for 2014 the company promises its investors that it will improve financial returns and cash flow through greater extraction of oil and gas and increased acquisition of fossil fuel reserves. The report states that Shell intends to use 85% of capital investment – provided by investors such as the Church – to explore new oil and gas reserves and develop major new extraction projects. It further celebrates an increase in its proved undeveloped reserves of 543 barrels of oil equivalent (boe), reaching 4613 boe in 2013. The report does not once mention renewable energies such as solar, wind or hydro.[1]

While the Church’s resolutions are a positive first step, they fail to address the fact that we need to leave 80% of existing fossil fuel reserves in the ground to keep temperature rise below 2°C. If companies such as BP and Shell were to be considered ethical in the context of this fact, they would need to demonstrate that they are on the way to transforming their entire business models away from fossil fuel extraction and towards clean technologies. What criteria will the Church use to monitor its effectiveness in persuading these companies to reverse their business strategies and leave trillions of dollars in assets untouched?

The Church does not engage with tobacco or arms companies because they oppose their fundamental businesses. Until BP and Shell invest the majority of their expertise and resources in developing clean technology solutions, they too cannot be considered an ethical investment. We call on the Church to take the next step by refusing to profit from and provide finance to an industry whose current business strategy is entirely at odds with its own ethical priorities.

Notes

Photo Credit: Duncan


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