MRTI considers fossil fuel divestment overtures
Urgency of climate change must be met with effective strategy, socially responsible investment group says
February 26, 2014
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?