1

Jul

2020

Methodist Conference supports motion on divestment and refers decision to Methodist Council

 

The Methodist Conference, which is meeting virtually this year, debated divestment from fossil fuel companies on Tuesday.

Conference members voted to support an amended motion and referred the decision on divestment to the Methodist Council, a smaller representative body, in the autumn.

The debate followed the announcement from the Central Finance Board of the Methodist Church earlier this month that it would divest from BP and Total, but continue investing in four oil and gas companies. It has continued investing in Shell, Repsol, Eni and Equinor after the Methodist Church’s Joint Advisory Committee on the Ethics of Investment (JACEI) concluded that these companies ‘are aligned, or are close to being aligned, with the Paris Agreement.’

Last week, 260 Methodists, including 114 ministers and former Presidents and Vice Presidents of the Methodist Conference, signed a letter calling for the Central Finance Board to complete divestment from fossil fuel companies. The letter highlighted that no oil and gas companies have aligned their business investment plans with the Paris Agreement goals, according to analysis from the Transition Pathway Initiative and Carbon Tracker.

Conference members call for full implementation of 2017 motion

Martha Rand, a representative of the Methodist Youth Assembly, argued that JACEI’s recommendations did not fully implement the motion passed at the 2017 Conference to divest from any fossil fuel company that had ‘not aligned their business investment plans with the Paris Agreement target of a global temperature rise well below 2 degrees’ by the 2020 Conference.

She said: ‘While we celebrate the recent decision to disinvest from BP and Total…we strongly believe that the 2017 Notice of Motion has not been fully carried out, as the JACEI report on fossil fuels this year argues that companies deemed ‘close to aligned’ should still be invested in. But being ‘close to aligned’ with the Paris Agreement is not what the 2017 Conference voted for.’

Martha Rand presents Notice of Motion to the 2020 Methodist Conference

The motion was seconded by Revd John Howard, the former Chair of JACEI, the Church’s ethical investment advisory group. He said: ‘Even five years ago I would have wanted to do everything we could with engagement. But the process now is one in which we really need greater urgency.’

Katharine Crew questioned JACEI’s conclusions that four oil and gas companies ‘are aligned, or are close to being aligned with the Paris Agreement’, in light of recent Transition Pathway Initiative and Carbon Tracker research. She highlighted that Shell sanctioned a $6.4 billion fossil gas project in Australia in April, at the height of the Covid-19 pandemic.

The growing financial risks of fossil fuel investments

The Conference heard from the Connexional Treasurer, Revd Tim Swindell, who expressed concerns that divestment from fossil fuels could have a negative financial impact.

However, recent months have demonstrated that oil and gas companies are an increasingly risky investment, and oil and gas companies are unlikely to generate the same returns in the future as they have in the past. Shell cut its quarterly dividends by two-thirds in April. BP and Shell have warned investors that the low oil price could reduce the value of their assets by up to $22 billion (£17.9 billion) and $17.5 billion (£14.2 billion) respectively.

Martha Rand argued during the debate: ‘We believe it is financially in our interest to divest from fossil fuels. We have seen during the Covid-19 pandemic that oil prices have plummeted. Renewable energy is now cheaper than fossil fuels. Furthermore, government regulation, which is needed if we are to have a habitable world for future generations, will also limit the future use of fossil fuels.’

She highlighted that the current practices of oil and gas companies borrowing in order to pay dividends is not a sustainable strategy. In January 2020, the Institute for Energy Economics and Financial Analysis (IEEFA) published a report showing that the world’s largest oil and gas companies have failed to generate sufficient returns to cover the payments they have made to shareholders. For instance, Shell had a $22.9 billion cash shortfall between 2010 and 2019, which it covered primarily through taking out new loans and selling assets.

Revd Sarah Jemison, who spoke in favour of the Notice of Motion, highlighted the warnings from Mark Carney, former Governor of the Bank of England, that investors in fossil fuels risk being left with stranded assets. In December 2019, when pressed on whether pension funds should divest from oil and gas companies even if the returns were attractive, Mark Carney replied: ‘Well that hasn’t been the case (but they could make that argument). They need… to be clear about why that is going to be the case if a substantial proportion of those assets are going to be worthless.’

Climate justice and the need for Church leadership on divestment

Revd John Howard raised ethical concerns with continued investment in fossil fuels: ‘I now receive considerable amounts of my income from the pension fund, but I certainly would not want my comfortable standard of living to be achieved through a legacy of irreversible climate change that my children and grandchildren have to cope with.’

Martha Rand read out a quote from Amanda Mukwashi, Chief Executive of Christian Aid, in support of the Notice of Motion: ‘I strongly welcome this motion. To achieve climate justice, we need to ensure an extremely rapid transition out of the use of fossil fuels, and the onus must be on those whose emissions are historically the highest, to transition first and fastest. The Church needs to be at the forefront of putting our money where our mouth, and our heart, is.’

The Central Finance Board of the Methodist Church manages investments of £1.2 billion. Its subsidiary, Epworth Investment Management, recently launched the Climate Stewardship Fund, a fossil free fund avoiding investments in fossil fuel companies, mining companies and other carbon-intensive industries. The Climate Stewardship Fund currently has investments of £25 million, which is likely to grow as Methodist churches and Circuits decide to divest from fossil fuels.

James Buchanan, Bright Now Campaign Manager at Operation Noah, said: ‘We would like to thank all those who have supported divestment at the Methodist Conference. The climate emergency cannot wait. When the issue is considered by Methodist Council, the Methodist Church has a unique opportunity to support a just recovery from Covid-19 by divesting from fossil fuels and investing in the clean technologies of the future. It is clear that no oil and gas companies are aligned with the Paris Agreement, and therefore the Methodist Church must commit to full divestment now.’

Text of amended Notice of Motion

The Conference adopted Resolution 27/2 in the form:

  • The Conference welcomes the analysis provided by the Central Finance Board and JACEI, and the recent decision to disinvest from BP and Total
  • The Conference notes the recognition of the climate emergency by the 2019 Conference and the need for urgent action at all levels
  • The Conference notes that the Notice of Motion 2017/109 passed at the 2017 Conference requested disinvestment from any oil and gas company by the 2020 Conference that ‘has not aligned their business investment plans with the Paris Agreement target of a global temperature rise well below 2 degrees’
  • The Conference notes that the JACEI report for the 2020 Conference on Climate change and fossil fuels, which draws the conclusion that Repsol, ENI, Royal Dutch Shell, and Equinor ‘are aligned, or are close to being aligned, with the Paris Agreement’, has not fully implemented Notice of Motion 2017/109
  • Taking account of the findings of the Transition Pathway Initiative (TPI), a project supported by the Central Finance Board, the Conference refers to the Methodist Council a request that JACEI recommend that the Central Finance Board fully implements Notice of Motion 2017/209, and disinvests before the 2021 Conference from all oil and gas companies which are not currently aligned with the Paris Agreement target of a global temperature rise well below 2 degrees.

Divest your church

If you would be interested in getting your local church, Circuit or District (or dioceses and equivalents in other Churches) to make a divestment commitment as part of the next global divestment announcement in the autumn, we would be delighted to hear from you! Find out more on our Divest your church step-by-step guide or get in touch with Bokani Tshidzu, Bright Now Campaign Officer, on bokani.tshidzu@operationnoah.org

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