The Church of England’s investment bodies have launched a new policy on investing in extractive industries, such as oil and gas exploration and production, and mining.
The Church said the policy provides “a distinctively Christian approach” to investment in the extractive industries, and is the culmination of theological reflection, expert input, public consultation, and visits to mine sites and communities over a two-year period. It said that its key ethical concerns in the extractive industries are not over the extraction itself, but in business conduct, such as risk management, the effects of operations on communities and national economies, and operating standards.
“This policy recognizes that good economic management aligned with strong ethical standards of operation can go hand-in-hand with long-term economic sustainability,” said First Church Estates Commissioner Loretta Minghella in a statement. “It also provides clarity about the sorts of concerns which, left unresolved, could ultimately lead to disinvestment.”
The new policy points out that extractive companies can be particularly vulnerable to poor governance and ethical controversy, and can have harmful, long-lasting impacts on communities and the environment.
The policy raises concerns about ownership structures, such as joint ventures, and about different corporate reporting standards and varying standards of operation. It calls for greater focus by company boards on the risks around tailings dams, and raises concerns around frequency and seriousness of dam failings. The policy also underscores the threat that extractives can pose on protected areas, such as World Heritage Sites.
“Companies carry enormous responsibility and joint ventures raise serious questions around standards of reporting and operation,” said Adam Matthews, head of engagement for the Church Commissioners and Pensions Board, in a statement. “This policy makes clear that we consider a company to have responsibility for both its direct and in-direct operations, and that we will be engaging with them on that basis.”
According to the policy, it is also the responsibility of investors to “know their companies” and to engage with them as the principal and most-effective means by which the Church’s investing bodies can help improve company performance, and contribute to making the sectors more sustainable and responsible.
The Church said it will consider divesting from companies that don’t meet the standards of the new policy, and where engagement is rebuffed or not leading to progress, but only “as a last resort,” and on a case-by-case basis.
“Disinvestment applies in cases where companies are unresponsive to investor concerns, require a disproportionate level of engagement and/or pose too great an ethical risk to warrant continued engagement,” said the Church.