The Church of England's "less than morally perfect" portfolio
If you rail against the usurious evils of Wonga, you really oughtn't to be surprised if you're called a hypocrite for enriching your own £6bn investment portfolio from its exorbitant payday loans. The Archbishop of Canterbury urged swift divestment: he wanted to "compete" Wonga out of existence. But the Church Commissioners have decided otherwise, principally because they stand to lose somewhere between £3m-9m if they ditch their Wonga shares.
The Church explains its new policy in this press release:
Ethical Investment Advisory Group - ethical investment restrictions tightenedAnd so the negative publicity, bad press and 'outcries' will continue, as they rightly should.
The Church of England’s Ethical Investment Advisory Group (EIAG) has tightened its recommendations regarding investment restrictions. From this month none of the EIAG’s investment exclusions have a revenue threshold higher than 10%, a reduction on the previous 25% threshold.
The EIAG also announced that during 2013 it instructed votes for the Church Commissioners and Church of England Pensions Board on over 30,000 resolutions at approximately 3,000 company general meetings. Reflecting wider concern over executive remuneration packages, the EIAG withheld support in over 70% of cases.
In wider corporate engagement, church investors recorded important successes in the areas of both alcohol and pornography. After engagement with the EIAG, all three major UK-listed supermarkets – Tesco, Sainsbury’s and Morrisons – published alcohol policies newly acknowledging the potential for alcohol to cause harm. In the area of pornography, church investor engagement with a major telecommunications company led to the company ceasing to promote pornographic material on its handsets in the UK.
The threshold reduction follows a review requested by the Archbishop of Canterbury in light of the “Wonga controversy.” As a consequence of the review process revenue thresholds used to exclude companies on account of their involvement in tobacco, gambling, high interest rate lending and human embryonic cloning have been capped at 10% from the previous threshold of 25%.
The annual review makes it clear that these new restrictions would not have prevented the exposure to Wonga which was in a pooled fund and which could not have been screened in the same way as direct holdings are.
Edward Mason, EIAG Secretary, said: “Exposure to restricted investments, like Wonga, can occur in pooled funds and the EIAG accepts this.” Commenting on the EIAG’s intention to propose a new pooled funds policy to the national investing bodies, he said: “The policy will specify controls on the use of pooled funds but will not bar their use.”
The EIAG will publish the new policy on pooled funds later once the investing bodies have agreed it. The annual review explains that pooled funds are often the only way to access certain asset classes and investment strategies – including venture capital which, along with increasing financial returns for investors, also serves society.
Writing in the report’s foreword, EIAG Chair James Featherby explains that the Commissioners’ indirect investment in Wonga highlighted some misconceptions about ethical investment, and in particular that its objective is to achieve a morally perfect portfolio.
“In our view Christian ethical investment is, instead, about fulfilling responsibilities to beneficiaries and trying to make a positive difference in society. The Church’s national investing bodies seek to do the latter through engagement with companies, partnerships with other investors, and participation in public policy initiatives. In this way they aspire to be part of the Church’s witness to the world.”
Mammon is morally tainted. As the Chairman of the Ethical Investment Advisory Group says, "It is no more realistic to desire that they invest only in morally perfect companies than it is to desire that any of us should relate only to morally perfect individuals."
And so: "When engaging with companies the investing bodies seek positive momentum not perfection. We usually only recommend divestment where we see no genuine desire for change."
But if it is now the Church of England's policy to invest in blatantly unethical and immoral corporations in order to nudge them toward righteousness and salvation, why not enrich your less-than-morally-perfect portfolio from the proceeds of (say) pornography, prostitution, landmines, tobacco, or firms that exploit under-age workers in the developing world? Why divest oneself of shares in Israeli companies if by continuing the engagement you may bring to an end the appalling suffering of Palestinians and eradicate Israeli 'apartheid'?
Is socially-conscious investing a credible way of mitigating sin?
In 1758, the Quakers withdrew their investments from the extremely lucrative slave trade. They did not deem it consistent with the teachings of Christ to invest in evil in order to nudge it toward righteousness.