We're divesting! But how will it be measured?

The Church of Ireland Synod 2020 is now on. This time it is being held virtually over Zoom, which allows an important meeting to take place but does come with challenges (echo, echo!).  Divestment is finally in black and white but a question remained on how it will be measured.

The General Synod Book of Reports was published a few days before and it included for the first time a commitment to fully divest from fossil fuels. It's fantastic to see it in print and it created quite a bit of interest on Twitter,

The key documents for divestment in the Book of Reports are the Environment, Social and Governance Policy and the Policy on Climate Change (pages 99 and 101). Close examination of these policies led to some questions in my mind.  So I gave this short speech at the synod,

"If you Google, ‘Energy sector performance 2019’, you read results like this, ‘Energy stocks are the biggest losers of 2019 -- and the decade’ 2020 has been even worse with major oil companies cutting dividends by two thirds. 

Investment and pension funds are at risk while they continue to hold fossil fuel stocks.  
So, I was very pleased to read in the book of reports that, “The RCB is committed to divesting from companies involved in fossil fuel extraction by 2022, as per the motion passed by General Synod in 2018.” 

 It is good to see that the policies on Environmental, Social and Governance, and on Climate Change, have been updated; and this is very welcome. 

On page 101 in The Climate Change Policy states that the committee has decided to fully divest from oil and gas companies that are, quote, ”not compatible with a two degrees alignment”. 

However, this is not the measurable target that was passed in the 2018 motion. 
The term ‘Alignment with two degrees’ is a noble aspiration, but it is vague. 

The Institutional Investors Group on Climate Change - of which the Church of Ireland is a member - said last year that the concept of aligning investments to the Paris Agreement limit of two degrees remains poorly defined. 

It is open to abuse from energy companies that market themselves as green but still operate with a turnover of 90% from oil and gas. 

As I finish, may I ask the chairman of the Investment Committee to confirm that the investment managers are working towards the measurable target set by General Synod - That by 2022 all companies with a turnover greater than 10% from fossil fuel extraction will be excluded?"

The verbal response to my question was a clear commitment to full divestment, but the measure that is going to be used to exclude fossil fuel companies was not clearly answered.  Here is the later written response,

Discussion on the Report

Stephen Trew (Down and Dromore) commented on the investments. He said that the energy sector performance for 2019 had been the among biggest losers. He said he was pleased to read in the Book of Reports that the RCB is commited to divesting in fossil fuels by 2022 but asked for a firm commitment to the measures that were adopted at previous Synods.  

Mr Saville replied that the investment committee is totally committed to fulfilling the obligation in totally divesting from companies with fossil fuel activities. He said there were different ways of measuring some of these things and differences in understanding on how this can be achived. “There is a common understanding that we are committed to moving towards that goal. There is no pullback in terms of the commitment given,” he stated. He suggested that if there was confusion over understanding it could be dealt with via direct communication between Mr Trew and the investment management staff.

Let's be clear, I was not confused.  The Climate Change Policy was written in a way that could lead to continued investment in so-called 'aligned to two-degree' energy companies. The wording in the motion passed by Synod in 2018, which included a standard measure of divestment from companies with > 10% exposure, was not included in the policy.  That very measure is used in the ESG policy in the Book of Reports when it comes to thermal coal and tar sands (read it yourself)

A recent headline in the Financial Times might shed some light on this  -

Thankfully, I also had phone calls from senior staff in the Representative Church Body who clarified that a robust measure to exclude fossil fuel companies with any turnover from fossil fuel extraction or with existing reserves to achieve full divestment by 2022.

I will keep plugging until the Church of Ireland is absolutely fossil-free.


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