Church of England dumps oil majors over climate concerns

The Church of England is selling its investments in Shell, BP, Exxon and Total and seven other big oil and gas companies, after concluding none were aligned with efforts to halt global warming.

The decision follows a vote by the General Synod, the church’s parliament, in 2018 to sell out of fossil fuel companies that were failing to take sufficient action to tackle climate change by 2023.

The church’s £10.3bn endowment fund and its £3.2bn pension scheme have spent the years since urging big fossil fuel companies to overhaul their businesses in response to climate change, or risk divestment. It said it had already excluded 20 oil and gas companies from its investment portfolio in 2021

The church said it had taken the decision to sell down its holdings in the remaining 11 oil and gas companies by the end of the year “after concluding that none are aligned with the goals of the Paris Climate Agreement, as assessed by the Transition Pathway Initiative”.

Under the Paris agreement, countries agreed to limit global temperature rises to well below 2 degrees and ideally 1.5 degrees above pre-industrial levels. The TPI is a project set up by Anglican Church, the Environment Agency Pension Fund and several other big asset managers to identify companies that pose the biggest climate change risk.

“We have long urged companies to take climate change seriously, and specifically to align with the goals of the Paris climate agreement,” said Justin Welby, Archbishop of Canterbury, and chair of the Church Commissioners for England, which manages the endowment fund.

“Some progress has been made, but not nearly enough. The Church will follow not just the science, but our faith — both of which call us to work for climate justice,” he added.

The church said it would also exclude all remaining smaller companies involved in oil and gas exploration, production and refining by the end of the year.

The church’s oil and gas holdings account for less than 1 per cent of the endowment fund, while the pension pot has about £7mn invested. Although a small investor, the Church of England has played an outsized role in shareholder discussions with oil companies over climate change.

The endowment fund has filed resolutions at Exxon and led discussions at the US oil major on behalf of shareholders that form the Climate Action 100+ initiative, which is made up of 700 investors with $68tn in assets under management. The pension fund has separately led discussions with Shell on behalf of the same initiative. 

Until now the Church of England had argued that it could have more impact by retaining its shares and pushing management teams to decarbonise, a belief echoed by many big investors. 

John Ball, chief executive officer of the Church of England Pensions Board, said: “Recent reversals of previous commitments, most notably by BP and Shell, has undermined confidence in the sector’s ability to transition.”

Shell’s chief executive Wael Sawan has said he remains committed to the company’s emissions reductions’ targets but this month told investors that Shell would also keep growing its giant gas business while maintaining oil production at current levels until 2030.

BP in February pared back its plans to cut oil and gas production this decade. It is now targeting a 25 per cent drop in output by 2030 compared to 2019 levels, down from previous plans for a 40 per cent reduction.

According to the Divestment Database, almost 1,600 investors and groups have pledged to sell out of at least some fossil fuel intensive companies, with educational and faith-based investors accounting for more than half of such divestments. 

Shell, BP, Exxon and Total have been approached for comment.

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