The Memo: Ethics, Investment and ESG: Church of England's fossil fuel holdings under scrutiny

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Ethics, Investment and ESG: Church of England's fossil fuel holdings under scrutiny

Isaac Hickford - 25th August 2022

Regardless of where you find yourself on a Sunday morning, the Church of England is a great force for social change. As the largest charity in the UK, the church was reported in 2018 to have an annual income three times the size of Oxfam. Yet in recent years the church has grappled with the challenges that come with being an institution of immense wealth. The commissioners fund – a £10.1 billion pot – is managed by a group tasked with increasing the amount of money the church generates through investments. All with a view to increasing the amount of money that’s available for the church’s work in the community. Crucially, this group is overseen by an ethical investment advisory board, formed with the intention of making sure the church doesn’t invest its money in businesses that run counter to Christian values.

The Church of England has, for some time now, resisted calls to divest those portions of its £10.1 billion commissioners fund and £3.5 billion pensions board that are allocated to fossil fuel giants such as Shell and BP, its two largest investments. The church publicly requires the companies it invests in to be working towards a net zero target, yet eyebrows were raised when research published in peer-reviewed scientific journal PLOS one claimed that accusations of greenwashing – deceptive environmental sustainability marketing – against Shell and BP were well-founded. 

Values-driven investments are nothing new, but the regulatory landscape around environmental issues is changing. ESG (environmental, social and governance) is the framework by which stakeholders of all kinds assess the environmental impact, social conscience, and ethical governance of institutions. As public awareness of climate change becomes more widespread, stakeholders are becoming increasingly concerned about the environmental impact of the businesses they invest in. Consequently, lawyers with expertise in related areas are in demand, as institutions as businesses seek to better understand how to bring their practices in line with ESG-related concerns.

Find out more about energy law here.