The United Kingdom’s state church on Thursday announced it is quitting oil and gas companies after its assessment found they have failed to align with the Paris Agreement, though it hopes for a return.
The Church of England has faced growing internal pressure in recent years to disinvest from fossil fuel companies. Over half of its 42 dioceses, which have their own investment bodies, have now vowed to exclude hydrocarbons from their investment portfolio, according to Christian group Operation Noah, which has campaigned for these investment bodies to stop funding oil and gas.
The move unveiled Thursday involves the Church Commissioners for England, which oversees the church’s $13.13 billion (GBP 10.3 billion) endowment fund, and the church’s pensions board.
The commissioners have “decided to exclude all remaining oil and gas majors from its portfolio, and will exclude all other companies primarily engaged in the exploration, production and refining of oil or gas, unless they are in genuine alignment with a 1.5°C [degrees Celsius] pathway, by the end of 2023”, they said in a press release.
The pensions board meanwhile will “disinvest from Shell plc and other oil and gas companies which are failing to show sufficient ambition to decarbonize in line with the aims of the Paris Agreement”, the board said in a separate statement.
The pullout by both bodies was in response to a report by the church’s National Investing Bodies that found “while some companies have made significant progress, no fossil fuel company has passed the 2023 hurdles set by the NIBs”, the church said in another release.
The commissioners had in 2021 already excluded 20 oil and gas companies from the church’s investment program. Their announcement Thursday expands the list to include UK multinational giants BP PLC and Shell PLC; Colombia’s Ecopetrol SA; Italy’s Eni ASA; Norway’s Equinor ASA; USA majors ExxonMobil Corp. and Occidental Petroleum Corp.; Mexico’s Pemex; Spain’s Repsol SA; South Africa’s Sasol Ltd.; and France’s TotalEnergies SE.
The board meanwhile will exit “all oil and gas companies that do not have short, medium and long term emissions reduction targets aligned with limiting global warming to 1.5°C, as assessed by the independent Transition Pathway Initiative.”
“The exclusion will apply to equity and also debt investments”, it said.
“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 1.5°C 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”, the commissioners’ chair and Canterbury Archbishop Justin Welby said. “Some progress has been made, but not nearly enough.”
The pension board’s chief executive John Ball said, “There is a significant misalignment between the long term interests of our pension fund and continued investment in companies seeking short term profit maximization at the expense of the ambition needed to achieve the goals of the Paris Agreement”.
The board said it had engaged with the sector over the last 10 years to push them to come fully onboard the 2015 Paris Agreement, which saw governments pledge to prevent the global average temperature from going two degrees Celsius (35.6 degrees Fahrenheit) above pre-industrial levels.
“Recent reversals of previous commitments, most notably by BP and Shell, has [sic] undermined confidence in the sector’s ability to transition”, Ball added.
Shell has decided to u-turn on a target to cut oil output by one to two percent yearly having already sold some fossil fuel assets including its shale operations in the USA, said a Reuters report June 10 citing unnamed company sources. However in a June 14 statement Shell maintained it still can become net-zero by 2050.
BP meanwhile has raised its planned investment into oil and gas to up to $8 billion more by 2030, it confirmed in its annual report March 10. It has set its hydrocarbon production aim to around two million barrels a day by the end of the decade, backtracking on a 40 percent reduction by 2030.
“While some companies have come close to achieving alignment as assessed by the TPI [Transition Pathway Initiative], none have met the threshold to remain investible”, the board statement said.
“As a result, the Pensions Board will no longer prioritize engagement with the oil and gas sector on climate change and will instead refocus its efforts on reshaping the demand for oil and gas from key sectors such as the automotive industry.
“The Pensions Board will be seeking robust commitments related to the use of oil and gas from demand sectors such as aviation, utilities, automotives, and steel. It will continue to engage policy makers on the need for greater ambition in public policy – including a phase-down of oil and gas which take account of the different needs of emerging and developing countries.”
Win for Campaigners
Operation Noah, a divestment campaign group of Christians that has led the push to get Anglican investing bodies to shun fossil fuels, celebrated the church’s decision and expressed hope for a domino effect.
“Operation Noah celebrates the Church of England’s decision to divest from all fossil fuel companies, which we believe should send shockwaves around the world, making it clear that these companies are not operating in good faith and not preparing for the global transition to renewable energy”, it said in a statement
“Investor engagement has worked in other sectors, but it has never really worked with fossil fuel companies, and we trust that today’s announcement by the Church of England will encourage many others to divest from fossil fuels and invest in climate solutions”, it added, also crediting the success to church clergy and lay campaigners.
Environmental coalition UK Divest welcomed the church’s decision tweeting, “Today’s announcement once again confirms what we have known for decades — engagement with fossil fuel companies *does not* and *cannot* work”.
Hope for Return
But the church signaled openness to reinvest in the industry.
“The decision to disinvest was not taken lightly”, First Church Estates Commissioner Alan Smith said in the commissioners’ statement.
“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.”
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