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Ethical investment: A challenging year

26 June 2006

The annual report of the Church of England’s Ethical Investment Advisory Group, published today, sets out a challenging year - with the call on the Church to disinvest from Caterpillar, the US manufacturer of construction and mining equipment, as the dominant ethical investment issue.

Major reviews of the ethical aspects of investment in gambling, and in newspapers also formed key parts of the past year’s work.

The Church continues to have concerns about gambling following liberalisation, and the EIAG recommended that investment in companies whose main business is gambling should still be avoided.

But in relation to newspapers the Group concluded that concerns about varying editorial standards should no longer be an impediment to investment in newspaper groups.

A further theme had been the challenge of responding to globalised business.  The EIAG sees engagement with business as being part of the Church’s mission to the corporate world, so helping to raise corporate standards over time.

EIAG Chairman, John Reynolds, said: “Over the past year the Group has seen evidence of the intensity of concern within the Church over ethical investment, in a spirited and informed General Synod debate, together with intensive engagement with many parties on Caterpillar.

 “We welcome this wide recognition within the Church of the importance of ethical investment issues.  At the same time, we have seen concrete examples of the EIAG’s ability to influence governance and ethical standards across a range of industries through increasing our level of engagement with a number of the major companies in which the Church investment bodies have holdings.”

Examples during the year included dialogue with 30 FTSE100 companies on their business approach to HIV/AIDS, and questioning supply chain policies with, among others, Marks & Spencer, J Sainsbury and Kingfisher. 

Looking ahead, EIAG’s workplan for 2006/7 leads off with a review of attitudes and approaches companies take towards their suppliers including creditor payment policies.

 

Notes

The EIAG carries out research on behalf of the Church of England’s three main investment and trustee bodies, the Church Commissioners for England, the CBF Church of England Funds, and the Church of England Pensions Board. It develops policy recommendations, which, once agreed by the bodies, are communicated to the wider Church. The General Synod, the Archbishops’ Council, and the Mission and Public Affairs Council are also represented on the EIAG.

The legal authority for all investment decisions rests with the three main investment bodies of the Church of England, as well as individual dioceses, parishes, cathedrals and associated Church organisations.

Caterpillar Inc.

In May 2005, the EIAG committed itself to a period of consultation and engagement following representations made to it about the Church’s investment in Caterpillar.  A detailed review resulted in a decision in September that there were no current grounds to recommend disinvestment.  The Group had been informed in its decision by there being no sales to Israel in recent years, and this, together with possibilities in the current delicate political negotiations, made the EIAG decide that it was the wrong time to recommend disinvestment.  However, the EIAG was clear that, were sales to resume, the matter would have to be revisited.

Following the General Synod resolution in February 2006, the EIAG conducted a further review.  After careful consideration at a specially convened meeting, it unanimously reaffirmed its previous decision. 

 

The full text of the Report for the year to 31 March 2006 is available at http://www.cofe.anglican.org/info/ethical/annualreports/