While activists cheered the recent decision by the Church of England to divest from fossil fuel companies, in reality the church’s vote does not call for any immediate action, nor does it commit to actually divesting any of its oil and gas holdings. The decision is another example of what we like to call “fake divestment,” and it ultimately aligns with Cambridge’s recent rejection of divestment.
We’ve seen the fake divestment approach used many times before at campuses across the globe. From Syracuse and Johns Hopkins and even the London Pension Fund Authority, this tactic has become prevalent among organizations who are hoping to appease activists and generate “feel good” press, while still holding on tightly to their oil and gas investments for the foreseeable future. This week’s announcement from the Church of England’s announcement is no different.
In what the Financial Times called a “symbolic move,” the General Synod, the church’s parliament, voted to pull investment from firms not aligned with the Paris Agreement by 2023. This means that in five years, not today, the Church of England will decide whether or not to divest from certain companies.
As of last year, the Church had £123 million invested in oil and gas companies in their equity portfolio, which represents just one percent of the £12 billion in funds that are impacted by this vote. Again, proving this gesture is more symbolic than substantial.
The measure that was ultimately adopted is less strict than the original proposal, which would have set 2020 as the deadline for compliance with the Paris Agreement. David Walking, deputy chair of the Church Commissioners, argued that the faster time frame would take away their ability to positively influence companies: “It would not spur companies to change further and faster. It would do the exact opposite; it would take the pressure off them.”
Indeed, the Church Commissioners and the Church of England Pensions Board, who are responsible for overseeing investments, noted that the ability to proactively engage companies, rather than direct divestment, is the best way to bring about change:
“Our active engagement and collaboration with other investors are changing companies’ behaviour, providing greater leverage and influence than we could achieve simply by selling our holdings. We are not convinced that forced divestment will bring about the change we need to see.”
This is in a line with arguments made by other churches that have opposed direct divestment of fossil fuel companies. For example, just last month, the Presbyterian Church in the United States voted “to maintain church investments in fossil-fuel corporations while aggressively advocating for reductions in actions causing climate-warming emissions.” In 2016, the leader of the church’s Mission Responsibility Through Investment (MRTI) committee explained their opposition to divestment:
“In the real world of corporate engagement, the more stock you own the more power you have; You are treated much more seriously by companies that are skeptical of what you are asking for.”
Likewise, the United Methodist Church has voted against divestment and the Lutheran Church passed a resolution to review investments rather than divest. Last year, several Catholic institutions announced they were divesting, only for it to be discovered that the establishments did not have any fossil fuel investments to divest. Other leaders in the Catholic Church have argued that divestment conflicts with Church’s ability to address poverty.
The Church of England’s announcement is the latest case of the fake divestment trend that’s become popular in recent years. It’s a tactic that we’ve seen repeatedly, and yet rarely has it led to actual divestment. Let’s hope over the next five years the Church of England continues to see the benefits of active engagement rather than pursing an ineffective divestment strategy.