New Ethical Screen for Church of England (And NOT Because of Wonga)

CIO Tom Joy and ethical investment advisory secretary Edward Mason tell aiCIO what was really behind MSCI’s appointment.

(January 30, 2014) — The Church of England has appointed MSCI as its new ethical screening partner, following a competitive tender process.

The Church Commissioners fund—which is a hybrid pension/endowment—hit the headlines last year after it was discovered that a private venture capital fund it held invested in controversial payday lender Wonga.

The Church fund has not directly invested in door step lenders, payday lenders, and pawn brokers for some time, but due to the opaque nature of private venture capital arrangements, there was no way for it to know about the Wonga holdings.

Contrary to some media reports, today’s appointment of MSCI as an ethical screening partner is in no way related to the Wonga story of last July, the Church’s CIO Tom Joy told aiCIO.

The fund’s ethical investment advisory secretary Edward Mason expanded further, saying the bespoke screening in support of the church’s policies on high interest rate lending offered by MSCI was also offered by the previous ethical screen partner EIRIS.

Instead, it was MSCI’s breadth of coverage across the investable market that won them the tender, Mason said.

“We had a competitive tender and there were some very good bids that came in. We felt MSCI best met our needs, as set out in that tender process…because of their wider coverage,” he added.

The Church fund has subscribed to MSCI ESG (environment, social governance) Research’s full suite of products to ensure that global companies in which they invest meet their ethical investment standards. Key aspects of this work will cover an investment universe of more than 9,000 companies and include:

1) Screening for companies involved in faith-based exclusion criteria such as tobacco, adult entertainment, gambling, defence, and weapons

2) Bespoke screening in support of policies on high interest rate lending and, for CCLA’s Charity Ethical Fund clients, energy coal extraction

3) Identification of companies involved in major controversies or that have breached UN Global Compact standards.

The church’s national investing bodies have also subscribed to MSCI ESG IVA ratings to support the integration of material ESG factors into their engagement and portfolio analysis processes, and to examine the potential for further ESG integration. 

Related Content: CIO Profile: Beyond Wonga, the Church of England’s Real Investments and Church of England to Hold RBS Branches for the Long Term