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MRTI considers fossil fuel divestment overtures

Urgency of climate change must be met with effective strategy, socially responsible investment group says

February 26, 2014

NEW YORK

The Presbyterian Church (U.S.A.)’s Mission Responsibility Through Investment Committee (MRTI) ― charged by the General Assembly to ensure that church investments align with the church’s social and environmental policies ― well knows the threats posed to Planet Earth by the continuing production and use of fossil fuels worldwide.

But the group is clearly troubled by the growing movement in the church ― and by organizations such as 350.org ― to summarily divest from fossil fuel companies without utilizing other corporate engagement strategies that have proved effective over more than 30 years of MRTI activities.

At its Feb. 13-14 meeting here, MRTI turned its attention to fossil fuel companies and the campaign to divest from them ― eight presbyteries have submitted overtures to this year’s 221st General Assembly calling for total divestment over the next five years.

“Climate change is an acute issue,” said Chris Davis, director of investment programs for CERES, a long time MRTI partner on environmental issues. “The ‘100-year storm’ seems to be an annual event ― and all this with just 1 degree of atmospheric warming since the beginning of the industrial revolution.”

CERES, founded in 1989 and best known for its “CERES Principles” ―  a ten-point code of corporate environmental conduct to be publicly endorsed by companies as an environmental mission statement or ethic ― “doesn’t give investment advice but urges investors to do something,” said Davis, a former environmental engineer.

The arguments for divestment from fossil fuel companies are clear, Davis told the committee, which includes representatives from the PC(USA)’s Board of Pensions and the Presbyterian Foundation ― the two largest PC(USA) investing agencies with combined assets of nearly $10 billion ― as well as from the churches Advisory Committee for Social Witness Policy and the Advocacy Committees for Racial Ethnic and Women’s Concerns.

“There’s the morality of investing in companies responsible for climate change,” Davis said. Also, “Divestment makes a political statement that hopefully stigmatizes fossil fuel companies. And there’s the ‘stranded assets,’” he added, referring to fossil fuels that are still in the ground but too costly to extract to be profitable, creating liabilities for fossil fuel companies and investors in them.

The question investors must ask about possible divestment, Davis said, “is ‘What’s the goal?’ Do you want to make a moral and ethical statement? Do you want to stop climate change and its effects? Do you want to protect your investment portfolio from risks? How you answer those questions determines your strategy.”

The PC(USA)’s investment strategy ― at least during MRTI’s 30 years of existence ― has always considered divestment a last resort, a step taken only after other forms of corporate engagement have failed.

MRTI has had considerable success over the years in such areas as endorsement of the CERES Principles and other environmental measures, affirmative action and equal employment opportunity, corporate governance transparency and perhaps most notably participating in the economic pressure that helped bring down apartheid in South Africa.

MRTI pursues a strategy that includes dialogue with corporations, shareholder resolutions, proxy voting and ecumenical shareholder pressure before even considering divestment.

That’s why Judith Freyer, chief investment officer for the Board of Pensions, for one, wants the fossil fuel divestment overtures referred to MRTI. “These overtures seek to bypass MRTI, which has been productive for more than 30 years.”

The Board of Pensions has not yet formally discussed the fossil fuel divestment overtures, but Freyer said the board at its Feb. 27-March 1 meeting “will probably ask the General Assembly to refer them to MRTI.”

William Somplatsky-Jarman, MRTI’s coordinator, said, “I really think we can make more of an impact if we target specific companies for engagement. The intent of these overtures is good ― the problem is with the strategies being proposed.”

Anita Clemons, investment officer for the Presbyterian Foundation, agreed. “There are a number of kinds of dialogue that I think can be helpful,” she said. “Let’s talk to some of these companies about their risk strategies or about their political activities, asking them to be creators, not obstructers.

Exxon/Mobil “has really come around on this,” Clemons added, “acknowledging climate change and creating macro-investments … some are even coming around to a carbon tax, though not so much on ‘cap-and-trade’ fossil fuel policies.

In short, Clemons said, “There’s lots of opportunities for diversifying in these companies and investors should be pursuing a multi-faceted approach.”

Davis said one of the strongest arguments against divestment is “that we lose a seat at the table as a shareholder. I’ve heard corporate executives say they wish that investors like us will divest,” he told MRTI. “Then they’ll be rid of us.”

There are growing alternatives to fossil fuel company investments, Davis noted: low carbon indexes and carbon free funds, clean technology and “environmental solutions” funds, “green” bonds and real estate and renewable energy funds.

PC(USA) environmental advocates, policy makers and investors all appear committed to combatting climate change. The question remains: how?

  1. More broadly, something that bothers me about divestment campaigns -- and why I'd like the church to largely refrain from them -- is that they are fundamentally about vilification as a substitute for real action. Certainly some of the fossil fuel companies that would be affected have done some villainous things. But ultimately, we must recognize that the real villains here are us and our energy-intensive way of life. Fossil fuel companies only sell us the products that we demand from them. Instead of the negative action of focusing ire on a set of demonized companies -- a demonization that will inevitably reach some of our fellow Presbyterians -- why not look at ourselves -- our lifestyles -- and determine to make a positive change? Divestment campaigns inspire cynicism and division, and may cause more problems than they solve. Positive action in response to the energy crisis, by contrast, can inspire positive action in others.

    by David Mebane

    May 18, 2014

  2. Geneva Presbytery NY passed a divestment overture concurring with the Presbytery of Boston today March 18, 2014. The author Megan Gregory comments, "The original overture is posted at: http://pc-biz.org/Explorer.aspx?id=4587. The overture passed today will be listed as a "concurrence with additional Rationale," since I added some stuff to complement the original Rationale. I am glad the commissioners will have this additional information as they discuss and vote on the overture." Please contact FPC ITHACA officefirstpresithaca@gmail.com or PPAN for this additional information. PPAN Synod of NE (ppan_sne@yahoogroups.com)

    by Brad McFall

    March 18, 2014

  3. It's easy to say "Disinvest!" and feel like you are doing something. But you aren't really. Someone else will buy the stock you sell, and life will go on. Want to really make a moral statement? Try reducing or eliminating the use of fossil fuels in your own home, your car, your church, your school, your community center. Work on that, because that will have plenty of impact in the economic and political real and show that you are personally making an effort rather than sitting back and letting someone else make the decision for you. Then you will really have to work through what it means to "Put your money and your life where your mouth is, both in a personal sense, and in community--and inevitable conflict--with others. Bear in mind that these investments have a good return, which is sorely needed for the good causes of pastors' ALREADY SMALL PENSIONS, death benefits of pastors' death benefits, and benefits to their spouses, families, survivors. Do somethinga ctive rather than passive...Rev Scott Myers, Kansas City, Missouri

    by Scott Myers

    March 17, 2014

  4. MRTI has an honored and distinguished history in the long and always arduous task of divestment. They have done great work in the interest of connecting social justice to how we spend our money. But this one is different. Very different. It is the unanimous conclusion of all credible scientists that we have a very short window of opportunity to prevent runaway climate catastrophe. (Sadly, some of these scientists say it may already be too late.) Our only chance is to act, and to act immediately. The process that MRTI requires is always years, sometimes decades, in the making. We do not have that kind of time. We are in an emergency time. And urgent action is required. Even a big fan of MRTI, like me, recognizes that MRTI is not equipped to act in an urgent way. There is also another consideration. "Shareholder resolutions" and other shareholder actions are always about modifying business practices. For instance, the Caterpillar situation would lend itself to working on the inside to create a movement to stop selling equipment to the Israelis who are dismantling the Palestinian settlements. The shareholder movement would not be to shut down the company. But, what is required in this situation is that we stop using fossil fuels. It is not going to happen from the inside: no "shareholder" is going to argue that the company be shut down. The current situation calls for a prophetic, moral word. Already the “least of these” (who have not caused the problem) are suffering and dying. Our progeny will join them. The climate, and thus a sustainable Earth, is being wrecked by carbon. It is immoral to profit from this wreckage. The church must lead the way in saying "no". If we as a denomination had investments in businesses that depended on slavery, we would not turn to MRTI to lead in negotiation. We would turn to the denomination to say, "slavery is wrong. We will not support it." Continuing to invest in the development of fossil fuels is destroying the Creation that the Creator called "very good." We do not negotiate about this. We say it is wrong. Now.

    by Gwin Pratt

    March 5, 2014

  5. To be clear: the dangers the world faces from climate change are real, and we need to apply some political pressure in order to move toward a world where we use less fossil energy (and, correspondingly, less energy overall). However, ending our reliance on fossil fuels is not something we currently have the technology to accomplish without causing vast economic destruction and sending our society back to the dark ages (literally). We have simply grown too reliant on fossil fuels, and I daresay that you, me and just about anyone we know relies on them every single day for things that are critical to our survival and well-being. Even people whose houses are covered by solar panels must still rely on fossil-generated energy when the sun goes down. It may be possible for some, using the latest energy efficient technology, renewable sources such as solar panels, and expensive energy storage technologies to completely disconnect from the grid, but the cost this entails renders it prohibitive for almost everyone. The problem is energy storage. The sun is not always shining and the wind does not always blow. But storing energy is technologically hard, and I think it's safe to say that no-one knows how we will solve that problem. (Hydrogen, next-generation batteries or some other chemical carrier are all candidates at the moment.) The storage problem means that at present, all renewable installations -- including those attached to peoples' houses -- must have fossil back-up. The alternative is regular blackouts and brown-outs, which would spell economic disaster and real hardship for millions. Would the economic problems associated with an abrupt and premature change to an all-renewable portfolio be better or worse than the likely effects of climate change? The experts are divided. How can the PCUSA possibly be certain?

    by David Mebane

    March 5, 2014

  6. I don't think the "let's take our ball and go home" mentality of divesting from everything and anything we think is harmful in some way is being salt and light in the world. The Apostle Paul encouraged "divestment" from involvement with sexually immoral persons in 1 Corinthians 5:9. But then he wrote "not at all meaning the immoral of this world, or the greedy and robbers, or idolaters, since you would then need to go out of the world." (vs. 10) Let's use our "investments" to advocate for kingdom living rather than simply withdrawing into a Christian cocoon.

    by Paul Thwaite

    February 27, 2014

  7. In fact, the MRTI has not been effective in changing the practice of fossil fuel corporations. MRTI is too little, too late. At least let the overtures reach the General Assembly. Business as usual is not enough to change the course of climate change.

    by Brant Copeland

    February 26, 2014

  8. Profiting from companies that are designed to increase global warming and who also lobby against laws and regulations that would reduce carbon emission is something we should want no part of. As Bill McKibben has said, "It it's wrong to wreck the climate, then it's wrong to profit from that wreckage." Chris Davis asks, "What's the goal?" Your money or your life shouldn't be that hard of question for Christians. Divestment in fossil fuels is a moral imperative for people of faith. MRTI members suggest that divestment takes away the opportunity for corporate engagement. Such a statement of supposed shareholder power over the richest companies in the history of money is absurd at face value. Corporate dialogue and resolutions have been tried in the past with no effect. Exxon/Mobil is not going to change its long-term business model because of a few vocal shareholders. We cannot wait for two or more years for MRTI to debate the obvious: We have a moral obligation to care for creation. My grandchildren's generation is going to live in a world shaped by our choices today. My hope is they will live in a world similar to the one I have. Socially responsible investing for the denomination requires we divest from fossil fuels as quickly as possible. Fossil Free PC(USA)!

    by Rick Johnson

    February 26, 2014

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