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Date posted: 29 June 2023
Our team thought it would be helpful to reflect on the impact that the Church of England’s decision to take its money out of fossil fuels could potentially have. Perhaps you immediately sensed that it would have a significant impact, yet struggled to articulate exactly why that was so.
One of the key aims of the global divestment movement is to remove the unwritten social licence that the fossil fuel industry has to extract oil, gas and coal. What we mean by the ‘social licence’ is that which, as a society, we generally accept as good or desirable – or at the very least, benign. However, If more groups in a society begin to treat a particular product or industry as undesirable – a threat to public health that is to be discouraged, and something which requires careful monitoring and regulation, like tobacco – public policy tends to change.
Given its global prominence, as well as its role as England’s established Church, we think the Church of England declaring no faith in fossil fuels is a potential game changer. Faith groups have now divested from fossil fuels more than any other sector, and as entire segments of society pull back from fossil fuel investments – and particularly as notable institutions like the Church of England, which is not seen as especially radical, do – it gets more difficult for the fossil fuel industry to position itself as a good-faith actor intent on playing its part in the energy transition.
Here, we examine the different ways the CofE’s divestment could positively impact the world.
Impact on International Investors
As Operation Noah’s Chair of Trustees Revd Dr Darrell Hannah has said, the decision by the Church of England’s National Investing Bodies to divest from all oil and gas companies will send shockwaves around the world, as demonstrated by coverage the announcement has received, with the likes of Retuers and Agence France-Presse (AFP) reporting the announcement.
It is also significant that the Church of England is viewed as a relatively conservative institutional investor, which makes its decision to divest difficult for investors naturally sceptical of divestment to dismiss. This announcement also makes it clear that none of the major fossil fuel companies that the Church of England was invested in are in compliance with the Paris Agreement.
Given the Church of England’s role in establishing the Transition Pathway Initiative (TPI) – a way of evaluating the environmental credentials of companies, including fossil fuel companies – and having also worked for many years with major coalitions of investors to engage with oil and gas companies, the Church of England has global influence with investors. The Church of England is also hugely influential in the Anglican Communion – a family of Churches that spans 165 countries – and is looked to by many organisations around the world, both religious and secular, for how it invests its money and which companies it considers to be unethical.
The Church of England now joins other Churches in the Anglican Communion in announcing its divestment from fossil fuel companies, including the Anglican Church of Southern Africa, the Church in Wales, the Church of Ireland, and the Anglican Church in Aotearoa, New Zealand and Polynesia. Could this decision influence the Episcopal Church in the US to divest, or the Anglican Church in Canada or Australia – countries that are among the Fossil Fuelled Five?
We believe it could.
Impact on Church of England Dioceses
Last week’s decision by the Church of England Pensions Board and Church Commissioners to divest from all fossil fuel companies is expected to trigger a wave of divestment commitments from Church of England dioceses yet to make a divestment pledge. The Church of England has 42 dioceses in total, and 24 of those dioceses – more than half – have already ruled out any investment in fossil fuels. The remaining dioceses now face mounting pressure to join the movement, especially in light of the fact that some dioceses have previously said they would take their lead from the national Church. Among the dioceses yet to make a divestment commitment, 12 currently have no fossil fuel investments but have yet to rule out future investments in fossil fuel companies, while six continue to invest in oil and gas companies.
Those dioceses still investing in fossil fuels have often cited the potential for positively influencing oil and gas companies as a key rationale. However, such arguments for diocesan engagement look increasingly weak given the small scale of diocesan investments, and that much bigger investors, such as the Church of England’s National Investing Bodies, have now determined that divestment will make a bigger impact than investor engagement.
It is now imperative for all dioceses to make full divestment commitments and redirect investments towards climate solutions – something any Deanery Synod or Diocesan Synod member can make happen by introducing a Private Member’s Motion, calling on their diocese to divest. Fossil fuel companies spend just a sliver of their capital investment on renewable energy and low-carbon projects, and rather than building renewable energy infrastructure at scale, they are continuing to stall for time while exploring for new oil and gas against scientific warnings.
Impact on the Catholic Church in England and Wales
The Church of England’s divestment from fossil fuels is expected to influence discussions within the Catholic Church in England and Wales. Most UK Church denominations, including the Catholic Bishops’ Conference of Scotland, Methodist Church in Britain, Church in Wales, and the Baptist Union have already divested from fossil fuel companies. Additionally, half of all Catholic dioceses in England and Wales (11 out of 22) have now made the decision to divest.
The Vatican issued environmental guidelines in a June 2020 document called Journeying Towards Care for Our Common Home: Five Years After Laudato Si’, explicitly recommending Catholic organisations avoid investing in fossil fuels and that they promote a transition to clean and renewable energy. In 2021, 176 Catholic young adults in the UK published an open letter in The Tablet, urging fossil fuel divestment.
The Catholic Church in England and Wales has followed a similar investment approach to the Church of England, and an announcement in response to the recent changes is anticipated.
Impact on Impact Investing
Following the National Investing Bodies’ decision to divest from fossil fuels, the Church of England has a wonderful opportunity to take a leading and proactive role on investment in climate solutions, encouraging other faith institutions and ethical investors to do the same.
The Church Commissioners and Pensions Board have started making investments in climate solutions, as outlined in our report Church investment in climate solutions: Financing a liveable future. However, there is further to go, especially as global investment in renewable energy must triple by 2030, according to the International Energy Agency (IEA).
Dr Cathy Rhodes from the Diocese of Sheffield has put forward a Private Member’s Motion to the CofE General Synod calling on the National Investing Bodies to scale up investment in climate solutions year-on-year to at least 10% of assets by 2030. So far, 74 General Synod members have signed the Private Member’s Motion. Perhaps you could contact your local Synod members and help get to 100+ signatories? Get in touch if you’d like to find out more.
Impact on Church Land Use
It is very encouraging that the Archbishop of Canterbury’s statement on divestment included a focus on climate justice as well as care for creation and concern for our global neighbours. Trusting that this day would come, Operation Noah had already begun to diversify our areas of campaign work, looking to influence the Church to invest more in climate solutions and to use its land for the benefit of climate, nature and people.
We are pleased to see a new deforestation policy launched by the National Investing Bodies which will lead to more scrutiny of investments as well as engagement with companies to end deforestation – a major contributor to the climate crisis, as it destroys valuable carbon sinks.
Alongside engaging with other UK Churches, we also want to see more sustainable use of Church of England land, building on positive initiatives such as the Anglican Communion’s ‘Communion Forest’ tree-planting scheme, partnerships to protect peatland, and some recent examples of regenerative farming by tenant farmers on Church of England land.
There are great opportunities for all UK Churches to show positive leadership in these areas, not only by stopping investment in industries which fuel the climate crisis, but also by demonstrating how investment in climate solutions and Church land use can support a fair and fast transition to a net zero economy and a sustainable future.
