Step up the pressure on corporate polluters
Climate change exposes in stark terms the abrogation by humankind of our creation responsibilities. Entrusted to care for creation, or at least for our small plot, we have instead risked it all in selfish pursuits. Each year that goes by with insufficient action taken to limit fossil-fuel use is a global missed opportunity that could affect the lives of millions. It is no wonder, therefore, that fossil-fuel disinvestment campaigns have intensified, while Churches and other faith-based organisations have responded.
Yet this is not where church investors’ main focus should be. It is even more important that investors apply pressure to companies outside the fossil-fuel sector — such as electricity and transport companies — that are responsible for unacceptably high carbon emissions.
Church investments matter. For example, the Church Investors Group, which has 59 members predominantly drawn from the UK and Ireland, represents combined investments of more than £17 billion. It should be no surprise, therefore, that pressure on church organisations to disinvest from oil, gas, and coal companies has increased.
It is a regular theme at Church of England General Synod meetings, and, in October last year, 40 Roman Catholic institutions and related organisations, led by the Sacro Convento in Assisi, announced that they were adopting disinvestment polices. A further joint disinvestment announcement from Roman Catholic organisations is expected in the spring.
Last summer, the Methodist Conference in the UK called for further scrutiny of fossil-fuel companies and the case for disinvesting where company investment plans were not aligned with the Paris Agreement objective to cap global warming to “well below 2°C”.
We have since been conducting further research that will provide a new way to assess the sector and in greater depth than before. We are building on our three well- established climate-change policies. These require us to exclude companies that are significantly exposed to coal, or that are solely focused on finding new fossil-fuel assets, from investment. A number of companies have been excluded as a result; some holdings have been sold as the policies were implemented. The thrust of our approach, however, is to look at carbon emissions as fuels are used.
If the world is going to meet the central aim of the Paris Agreement, there is no doubt that fossil-fuel use has to decline. A recent study, Perspectives for the Energy Transition, by the International Energy Authority (IEA) and the International Renewable Energy Authority (IRENA), illustrates the point well. It models a scenario where there is a 66-per-cent probability that the average temperature rise is limited to +2°C. The report concludes that “around 70 per cent of the global energy supply mix in 2050 would need to be low-carbon”.
The IEA finds that the share of the energy mix represented by fossil fuels would need to fall from 81 per cent to 39 per cent by 2050, by which time coal and oil output would be at 1960s levels. These projections assume that technologies to capture and store carbon emissions are also rolled out, which seems a distant prospect at present.
There are clear implications for fossil-fuel companies, but there is also a need for significant action on the demand side from industries that emit large amounts of carbon. IRENA notes, for example, that electricity generation and industry are the largest carbon-emitting sectors, representing 65 per cent of total carbon emissions; the rest come from transport, buildings, and district heating. The transport sector alone accounts for a fifth of energy-related carbon emissions, because most motorists need to burn oil.
Given the scale of the challenge, companies in these sectors will need to increase substantially their investment in energy efficiency and low-carbon technologies. It is here that investors need to apply pressure for change.
Simply selling some fossil-fuel shareholdings is, therefore, not enough: the contribution to global warming, or to its limitation, from investment portfolios as a whole needs to be considered by investors. This is a tougher and more radical challenge, but one that we should embrace in the Church as we seek to ensure that our investments reflect as much as possible our responsibility as stewards of the environment.
It will always be important to hold fossil-fuel companies to account. Companies should not wait for others — whether governments or customers — to change before they adapt to a low-carbon world. They must be responsible, ethical, and part of the solution. That is why, for example, we are closely involved with the Church of England’s Transition Pathway Initiative, which helps to measure the extent to which companies are taking action (News, 13 January). It is also why we are now scrutinising the sector further as we seek to encourage all companies to make the changes required, keeping disinvestment as an option where progress appears to be too slow.
Time is not on the world’s side, but we act with hope as we strive to witness to a Christian approach to the environment, and to investment.
This article was first published in Church Times on 23 February 2018.