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Caterpillar: Ethical Investment Advisory Group confirms earlier decision

7 March 2006

The Church of England’s Ethical Investment Advisory Group, after careful consideration at a specially convened meeting to discuss Caterpillar Inc – the US-based manufacturer of construction and mining equipment – has unanimously reaffirmed its previous decision, taken in September 2005.

The decision involved: not recommending disinvestment from Caterpillar; continuing its programme of engagement with Caterpillar; and making clear its intention of revisiting this decision if there are new sales of Caterpillar equipment to the Israeli defence forces for use in the demolition of Palestinian houses.

The EIAG, whose members include some nominated by the three investing bodies of the Church of England (the Church Commissioners, the Central Board of Finance and the Pensions Board) and representatives from the  Mission and Public Affairs Council, the Archbishops’ Council and the General Synod, is responsible for giving ethical investment advice to the Church’s three investing bodies. The bodies alone have the legal authority to make investment decisions.

John Reynolds, chair of the EIAG said: “The EIAG reports regularly to the General Synod, and is gratified by what it sees as the rising level of interest in our work, and in particular by the wish of the General Synod to debate our report and the specific recommendations we make. We fully recognise that sometimes that interest will be critical, and lead to proposals that the EIAG reconsiders recommendations it has made.

“The EIAG recognises that the  particular topic debated by Synod is hugely contentious, and EIAG members, like other Christians, have different perceptions of the situation  in the Middle East. The Group in general, and its officers in particular, have spent an unusually large amount of time in engagement with Caterpillar and with the various  groups representing Palestinian and Israeli, Jewish and Christian opinion seeking to influence its decision.

“The EIAG also well recognises that others will also have spent a great deal of time on this matter and acquired a great deal of knowledge about the situation. For that reason, and as a body which gives account to the General Synod, the EIAG took the resolution very seriously, and at its special meeting considered all the points made in the debate and gave particular weight to the letter  it had received from the Bishop in Jerusalem,  as well as the one which was quoted in the debate.”

In reaching its decision, the EIAG bore in mind the following considerations:

  • The purpose of the ethical investment policy of the Church of England is to avoid profiting from enterprises engaged in activities which are either wrong or so controversial among Christians as to undermine the credibility and unity of the Church’s witness. The EIAG decision was taken in the specific context that there are no current or projected sales of Caterpillar equipment for use by the Israeli government; Caterpillar sold its equipment to a US Government body and had no direct sales to the Israeli Government; and the EIAG could find no compelling evidence that Caterpillar is or has been complicit in human rights abuses.
  • The purpose of the ethical investment policy is not to engage in punitive action or to make public gestures, however much individuals might in other contexts support such actions.
  • Disinvestment is by definition a last resort action, ending the possibility of engagement with the company. While engagement carries risks – not least a charge that engagement is only for show – the EIAG concluded that the engagement we have had with this company is productive, and justifies the intensive effort that has been, and will continue to be, expended. In particular, the company is very well aware that if sales were to resume the matter would immediately have to be brought back to the Group for very active reconsideration, and that the risks to the company’s reputation are real.
  • The EIAG will continue to reach its own conclusions on whether the Church of England is profiting from continuing sales of equipment for purposes contrary to our general ethical investment policy and whether therefore to recommend disinvestment at some future date.

John Reynolds explained: “Up to this point it has been apparent that on both sides of this very difficult argument there has been a recognition of the quality of engagement that has characterised the work of the EIAG and especially of its officers, and that it has engaged in a serious process of listening and research before reaching its conclusion; we hope that this note of explanation will be received in the same vein.”

 

Notes

 

1. The press release explaining the EIAG’s September 2005 decision on Caterpillar Inc

2. The Following Motion passed by General Synod on February 6th 2006 read:

That this Synod:

(a) heeds the call from our sister church, the Episcopal Church in Jerusalem and the Middle East, for morally responsible investment in the Palestinian occupied territories and, in particular, to disinvest from companies profiting from the illegal occupation, such as Caterpillar Inc, until they change their policies;

(b) encourages the Ethical Investment Advisory Group to follow up the consultation referred to in its Report (GS 1604) with intensive discussions with Caterpillar Inc, with a view to its withdrawing from supplying or maintaining either equipment or parts for use by the state of Israel in demolishing Palestinian homes &c;

(c) in the light of the urgency of the situation, and the increased support needed by Palestinian Christians, urges members of the EIAG to actively engage with monitoring the effects of Caterpillar Inc's machinery in the Palestinian occupied territories through visiting the Episcopal Church in Jerusalem and the Middle East to learn of their concerns first hand, and to see recent house demolitions;

(d) urges the EIAG to give weight to the illegality under international law of the activities in which Caterpillar Inc's equipment is involved; and

(e) urges the EIAG to respond to the monitoring visit and the further discussions with Caterpillar Inc by updating its recommendations in the light of these.’