The disinvestment debate

JESUS said: ‘Where your treasure is, there your heart will be also.’

Guidance from the Scottish Charities Regulator (OSCR) highlights the importance of charities aligning their investments with their purposes. The Church of Scotland Investors Trust wants to avoid investing in any company substantially involved in activities ‘which are felt to harm society more than they benefit.’

The companies and activities from which we profit really matter, however we look at it.

We are facing a climate emergency which is already having devastating impacts on ecosystems and lives across the world.

The urgent need for action is particularly highlighted by young people and our overseas partners, including at the General Assembly and in this magazine. The Scottish Government recently committed to reducing greenhouse gas emissions to net-zero by 2045, and the UK Government has now indicated it will do the same by 2050, to help meet the Paris Agreement to limit global warming to 1.5°C.This target is vital to minimise irreversible changes to the climate for people and planet.

The Church of Scotland has long recognised the importance of climate change, since we are called to care for creation and love our global neighbours, especially the poorest and most vulnerable.

We need to disinvest from companies whose core businesses are in contradiction with that calling, instead investing to support a ‘Just Transition’ to low-carbon technologies using the skills of those currently employed in oil and gas.

General Assembly debates have considered how best to achieve that transition with the required urgency, with engagement instructed since 2016. Yet Total is launching eight major start-ups in 2018-19, having increased production by 8% in 2018. Shell and BP are also increasing oil and gas production.No major fossil fuel company spends more than 4.5% of total capital expenditure on renewables or low-carbon solutions.

Major oil companies have known the risks of climate change and the destructive impact of burning fossil fuels for more than 30 years. They have had plenty of time and resources to invest in developing alternatives, had they wanted to. Instead, these companies have spent $1 billion on lobbying and publicity since the Paris Agreement, to limit or delay action on climate change.

Opponents of disinvestment cite shareholder resolutions and public statements. Yet these evade responsibility and the pace of change is far too slow. BP recently accepted a resolution, backed by the Church Investors Group amongst others, to provide a strategy ‘consistent with’ the Paris Agreement - yet only for their operational emissions, not those from burning their products (85-90% of total emissions). BP opposed another resolution asking it to set targets to reduce its total emissions. Shell has announced ‘ambitions’ to reduce the carbon intensity of its products by 2050, rather than targets for overall carbon emissions.

Total’s CEO, Patrick Pouyanné, was quoted in the Financial Times in 2017 saying that investing in renewables was ‘part of the way to make oil and gas business acceptable. It’s only 5% of the strategy. We are an oil and gas company.’ As the 2019 Church and Society Council report acknowledged to the General Assembly of the Church of Scotland, ‘engagement may result in oil companies becoming aware of our concerns, but their core activity remains the damaging extraction of fossil fuels.’ The oil and gas industry is planning to spend $4.9 trillion on exploration and extraction from new fields over the next decade, with devastating consequences.

But will disinvestment lose us our voice seeking change? No. We engage about gambling and the arms trade without money invested. The Church Investors Group includes the Quakers, Church of Ireland and United Reformed Church, all of whom have agreed to disinvest from fossil fuel companies - their voices are still heard.

Neither does disinvestment prevent us from caring for those working in the oil and gas industry.Because we care for them – a decreasing number, facing declining terms and conditions – we need to invest positively in alternatives for them, our communities, and the Earth. Our engagement ef orts could also be better directed where core business can transition to low-carbon alternatives, eg transport, construction and agricultural industries.

Some argue that, while we still use oil and gas, it is hypocritical to disinvest from companies supplying what we demand. Yet no-one is suggesting that disinvestment is sufficient on its own – we must also change political policy frameworks and our lifestyles, to tackle what the convener of the Church and Society Council has described as our ‘addiction’ to fossil fuels.

The Church of Scotland is already taking action, as are many congregations and members. Eco-Congregation Scotland supports congregations making important changes. The latest congregational electricity contract negotiated by the General Trustees is 100% renewable. The Church’s Church and Society Council is working on these issues, including discussions on the Just Transition in the north-east of Scotland and nationally.

Moderators have repeatedly called for more ambitious governmental action. Yet we must do more, as communities of faith and individuals – and fast.

Disinvestment is also a prudent financial choice, given that most fossil fuel reserves on companies’ books must remain in the ground if we are to meet the Paris targets. Increased litigation and regulation also bring significant risks to future profitability. Even past performance data suggests minimal financial risk from disinvesting – the 2018 report of the Church and Society Council cited an investment study which concluded that removing fossil fuels from a share portfolio would have had no long-term impact for the period 2004-2015.

However, we are a Church, following Jesus, and that should be the main factor in all our decisions, whether costly to finances or comfort. Christian Aid, which is calling on churches to disinvest, says, ‘As with every part of the churches’ mission, their investments must be guided by radical and sacrificial love.’ Having listened to our sister churches, the World Council of Churches has been calling for churches to disinvest from fossil fuels since 2014, while Desmond Tutu reminds us: ‘People of conscience need to break their ties with corporations financing the injustice of climate change.’

Disinvestment is a practical, legal and responsible way for the Church of Scotland to respond to the climate emergency. It sends a clear signal to the companies most responsible, and to political and business leaders, who must take urgent action now.

The Rev Jenny Adams is Minister of Duffus, Spynie & Hopeman Church Of Scotland. Next month: Brian Duffin, Chair of the Church of Scotland Investors Trust, will give the opposing argument.

• The Scottish Episcopal Church at its Synod in June agreed a motion to call for ‘a greater degree of disinvestment from fossil fuels than has been the case to date and for the setting up of an advisory body to assist the Scottish Episcopal Church in developing a strategy for disinvestment from sectors deemed to be unethical.’

• The United Reformed Church has also voted to disinvest. The Scottish Synod of the United Reformed Church disinvested in 2015 and this year the rest of the church followed, voting to sell £2 million in shares by 2020.

• The Church of England voted in 2018 to disinvest from oil and gas companies that do not meet the Paris Agreement requirements by 2023.