Church of England divests of fossil fuels as oil and gas firms ditch climate pledges

Church of England divests of fossil fuels as oil and gas firms ditch climate pledges

23 Jun    Finance News, News

The Church of England is divesting from fossil fuels in its multibillion pound endowment and pension funds over climate concerns and what the church claims are recent U-turns by oil and gas companies.

The church said it was abandoning oil and gas companies and all firms primarily engaged in the exploration, production and refining of oil or gas by the end of 2023, unless they were in genuine alignment with a 1.5C reduction pathway.

The church has previously rejected calls to sell off fossil fuel holdings in its £3.5bn pension fund.

Other faith institutions that have already announced their divestment from fossil fuels include the Baptist Union of Great Britain and the United Reformed Church.

In an announcement on Thursday, the C of E said it was divesting from fossil fuels in its £10.3bn endowment fund and its pension fund.

The pensions board would no longer invest in Shell, BP and other oil and gas companies because they were failing to show sufficient ambition to decarbonise in line with the aims of the Paris agreement, the church said in a statement.

The announcement comes after the new CEO of Shell, Wael Sawan, abandoned plans to cut oil production each year for the rest of the decade, partly in a bid to increase payouts to shareholders. In February, BP also scaled back its plans to cut oil and gas production this decade.

“The climate crisis threatens the planet we live on, and people around the world who Jesus Christ calls us to love as our neighbours. It is our duty to protect God’s creation, and energy companies have a special responsibility to help us achieve the just transition to the low carbon economy we need,” said Justin Welby, the archbishop of Canterbury, and the chair of the church commissioners for England.

“We have long urged companies to take climate change seriously, and specifically to align with the goals of the Paris climate agreement and pursue efforts to limit the rise in temperature to 1.5C above pre-industrial levels. In practical terms that means phasing out fossil fuels, investing in renewables, and plotting a credible path to a net zero world. Some progress has been made, but not nearly enough. The church will follow not just the science, but our faith – both of which call us to work for climate justice.”

Alan Smith, first church estates commissioner, said: “Soberingly, the energy majors have not listened to significant voices in the societies and markets they serve and are not moving quickly enough on the transition. If any of these energy companies come into alignment with our criteria in the future, we would reconsider our position. Indeed, that is something we would hope for.”

John Ball, the chief executive of the Church of England pensions board, said the move was driven by recent reversals of position by BP and Shell.

He said: “There is a significant misalignment between the long-term interests of our pension fund and continued investment in companies seeking short-term profit maximisation at the expense of the ambition needed to achieve the goals of the Paris agreement. Recent reversals of previous commitments, most notably by BP and Shell, has undermined confidence in the sector’s ability to transition.”

Responding to the announcement, Jennifer Larbie, Christian Aid’s head of global advocacy, said: “It is telling that the Church of England, which has worked tirelessly to engage with the oil and gas industry and shift it on to a sustainable approach, has decided that these companies are beyond the pale.

“If ever there was a sign that the UK government needed to step in and tax fossil fuel profits to pay for the damage they have caused, this is it. It’s only right that the polluters should pay.”

Charlie Kronick, an oil finance adviser to Greenpeace UK, said: “After years of trying to change these companies from within, the Church of England has clearly lost faith in Shell and other oil giants’ ability to redeem themselves. This should be a moment of moral reckoning for other investors and for our government.”

A Shell spokesperson said: “It’s disappointing, but not surprising given its recent change in stance, that the Church of England pensions board has taken this decision. Our commitment to becoming a net zero emissions energy business by 2050 remains as strong as it ever was, and we firmly believe our strategy is aligned with the more ambitious goal of the Paris climate agreement. At the same time, we are clearly focused on capital discipline, enhanced performance and delivering shareholder value.”

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