It was half a world away, but what the General Synod of the Church of England decided one week back about investing and climate change brought a smile to the executives at Genus Capital, a Vancouver-based money manager.
The church, which employs managers to invest US$12 billion in assets, passed a two-part motion: It will continue to engage with companies rather than prematurely disinvesting from them and assess their progress by 2023; after that it will disinvest from any companies not on track to meet the aims of the Paris Agreement.
“Synod’s vote makes clear that the Church must play a leading role and exercise its moral leadership on the urgent issue of climate change,” the church said.
It will get there in two ways: push for real change in the oil and gas sector through engagement with management, through using its voting rights and through filing shareholder resolutions (it says that it has been successful at Exxon Mobil, BP, and Shell); and, in time, divest, or sell, holdings in petro-carbons.
The church maintains its track record provides “greater leverage and influence than we could ever hope to achieve by acting alone or by forced divestment and simply selling our holdings.”
In other words, it’s best to be inside the tent trying to facilitate change, rather than sell equity interests, walk away and have no influence.
Wayne Wachell is a co-founder of Genus Capital, which has made fossil-free investing its mantra. About half of its $1.1 billion in client assets are invested under the fossil-free mandate. (Bank of Montreal offers some fossil free funds largely to retail investors.)
Wachell was pleased because a church has made fighting climate change a priority (two years back the Church of England opted to sell its investments in oilsands and coal). As well the church has put itself on the path to divest in time.
“It’s another brick in the wall of the divestment movement/social phenomenon,” said Wachell, whose firm will reach a level of managing about $500 million of fossil-free assets when the assets of a recently won mandate move over.
Wachell argues there are three waves to the divestment movement: Churches and activists lead the way; then come the universities and other public institutions; with the third wave being the involvement of the mass market. “This (decision by the church) helps the wave build up and get stronger.”
Not to be lost is the “symbolic act. It will bring attention and help the movement grow,” said Wachell, whose fossil-free approach comes from his own philosophy and from investment performance. “You don’t need hydro carbons to get performance,” he said, noting that cash not invested in oil, gas and coal producers is allocated to technology companies, banks and consumer goods companies.
But Wachell is not a large supporter of engagement, preferring outright divestment. “Our clients have made it very clear they don’t want their investments contributing to climate change.”
He doesn’t believe that oil companies, through engagement, will move to become greener or abandon their focus on the resources they own.
“They can do things around the edge, but are still going to pump,” he said, adding that underground oil and gas reserves are “the only asset oil companies have.
“How are you going to talk them out of (developing) that? I don’t think it’s ever going to happen. Our clients are concerned about more hydro carbons in the atmosphere.”
In May the Church of Scotland adopted a policy of engagement — rather than sell its oil and gas assets in two years. It made that decision because it gave the church “a seat at the table.”
Divestment hasn’t taken hold that much in Canada apart from the odd university and church group.