Methodists to expand disinvestment option on fossil fuels

The CentralFinance Board of the Methodist Church, which managesinvestments of £1.1 billion for the Church, has announced a newinvestment policy on climate change.

The policy, launched today at the CFB's annual GeneralMeeting, sets out how the CFB will assess the exposure of companiesto different types of fuel when managing its investmentportfolios.

The policy,  Climate Change - Implications for Different Fuels, adds to theCFB's existing investment approach, reflecting the MethodistChurch's positions and actions on climate change. The CFB has had aspecific climate change policy in place since 2009. Its most recentaction on climate change has been to co-file shareholderresolutions on carbon emissions management at the BP and RoyalDutch Shell AGMs this year, as part of the 'Aiming for A'coalition. The CFB also incorporates emissions disclosure in itsvoting at company AGMs.

The CFB extended its work on climate change last year byexamining the electricity generation industry, which is the largestsingle contributor to UK carbon emissions.  This led toadditional exclusions from investment and outlined a basis fordeeper engagement with companies.

"If global warming is to be halted, companies need to actin a way consistent with efforts to achieve that outcome," saidBill Seddon, Chief Executive of the CFB, at the launch of the newpolicy.

"We are committed to engaging proactively with companiesto influence their involvement in fossil fuel extraction. Ultimately, as a last resort, we have the option ofdisinvesting from a company if it continues to base its businessmodel on the assumption that emissions targets need not bemet."

The policy commits the CFB to encouraging companies toinvest in a way consistent with efforts to reduce greenhouse gasemissions in developed markets by 80%, and globally by 50%, by2050. The policy states that the CFB will "evaluate companies basedon the quality and level of disclosure of their emissions andemissions intensity, and the implications of their business modelsand investment plans for future emissions reductions."  Coalis recognised as the most carbon intensive fuel, but the extractionof oil from tar sands is also highlighted because it has a largercarbon footprint than conventional oil production.

The policy states that companies with investment plansthat imply a low probability that emission reduction targets willbe met, or which have significant exposure to coal or oil from tarsands, "would be inconsistent with the positions and actions of theMethodist Church and may lead to exclusion" from investmentportfolios. For example, this may include companies which havebusiness models "dedicated to exploring for and developing thosenew assets".

The policy also commits to looking at how companies lobbyon climate change issues as well as continuing to review localenvironmental impacts, human rights, and health and safetyissues.

The policy can be downloaded from the CFBwebsite. It was drafted by the Methodist Church's JointAdvisory Committee on the Ethics of Investment and approved by theCFB Council.  It will also be adopted by the CFB's subsidiaryorganisation, Epworth Investment Management Limited (Authorised andRegulated by the FCA), which manages assets for church and charityclients.

Clickhere for more information on the Methodist Church'sapproach to climate change.