This week, 350.org came out with a new announcement that the Evangelical Lutheran Church in America (ELCA) “voted to divest” from fossil fuels. Unsurprisingly, 350.org got their facts wrong.
So what actually happened? The ELCA passed a resolution to move forward with two actions regarding its primary investment fund as well as its pension fund that would 1) review policies to remove fossil fuel companies and 2) evaluate creating a new fossil-free fund for retirees.
As stated in the text of the resolution, the ELCA Churchwide Assembly voted to review its respective social teachings and Corporate Social Responsibility policies and procedures “with the goal of not investing in, and removing the largest fossil fuel companies as identified by Carbon Tracker, and investing in corporations which are taking positive steps toward a sustainable environment.”
This is not divestment, but instead a review of the Church’s current investments in its ELCA’s primary fund, a fund consisting of approximately $611 million that is invested in various index funds that have wide exposure to energy companies and companies that utilize energy to fuel, manufacture, and operate their businesses. If the fund did want to divest, it would have to drastically alter how it invests, imposing immense new transaction and managements costs on the organization.
Secondly, the resolution calls on Portico, the Board of Pensions of the church, to “offer an optional fossil-free fund for retirement plan participants.” This relates to funds in the ELCA pension and benefits program, including a much larger pension fund consisting of $7 billion dollars. As it currently stands, the fund includes a “public natural resources pool” that includes a number of energy equities including numerous oil and natural gas companies. Providing a separate fund is one thing, but if this was actually divestment like 350.org describes the fund would have some serious work and costs ahead of it.
Other churches, like the United Methodist Church, have realized these costs and voted against divestment. According to Barbara Boigegrain, top executive of the Church’s Board of Pension and Health Benefits, in the United Methodist News Service:
“‘If we divest with companies, The United Methodist Church loses a voice at the table,’ Boigegrain said. She added that if General Conference approved a fossil fuels screen, to go with screens in place for private prisons, alcohol, munitions, tobacco and pornography, ‘nine to 15 percent of the investable universe’ would be off limits to the pension fund. ‘It would greatly reduce our flexibility” in trying to support energy companies making positive change,’ Boigegrain said.”
The Lutheran Church, not unlike others, is also focused on combating poverty, the spread of malaria, and world hunger. As many have highlighted in the past, access to affordable energy plays an important role in supporting these efforts. According to the International Energy Agency:
Access to affordable and reliable energy services is fundamental to reducing poverty and improving health, increasing productivity, enhancing competitiveness and promoting economic growth. This is because it is essential for the provision of clean water, sanitation and healthcare, and provides great benefits to development through the provision of reliable and efficient lighting, heating, cooking, mechanical power, transport and telecommunication services.
This week’s announcement is not what 350.org described, but only time will tell if Evangelical Lutheran Church in America will move forward with divestment down the line. Members of the church, however, should understand that a decision to divest is a decision with unavoidable costs.