Call it a new era of faith-based investing…or perhaps a higher-order sovereign wealth fund. The Church of England’s endowment fund has become an activist shareholder of consequence in the global market for natural resource equities.
In the United Kingdom, the Church Investors Group is an umbrella organization of institutional investors from several denominations, including the Church of England and the Methodist Church, representing nearly $28 billion in assets. Earlier this year, the group’s asset ownership unit announced that it would use shareholder votes to push for faster change among FTSE 350 companies in the areas of climate change policy, gender parity, executive pay, living wage standards, corporate tax transparency, and board responsiveness.
In recent months, the Church of England has begun to flex its institutional muscle to push through its accountability agenda. Late last year, the Church co-filed a shareholder resolution to compel Exxon Mobil to disclose its greenhouse emission targets. In January, the Church abruptly dumped its shares in the world’s largest iron-ore producer, Brazil-based Vale—prompting other institutional holders to do the same—after the collapse of a Vale mine killed more than 100 people and polluted the surrounding area with toxic mining waste. The Church then formally approached 20 Russian mining companies, calling upon them to disclose their environmental risks.
This spring, the Church took aim at Exxon Mobil once again, leading a shareholder rebellion as part of the investor group Climate Action 100+ at the company’s annual general meeting. Here, the Church backed a proposal to separate the board chairman and CEO roles, and to introduce a diversity matrix for board positions. And last month, the Church announced that it would consider investments in medical cannabis.
While the fund targets annual returns in the 8% range (and has averaged 8.9% over the past 30 years), its return on assets in the volatile market climate of 2018 was a modest 1.8%.
Affiliation with the Church of England investment fund has also become a coveted resume line item. Earlier this month, Royal London Asset Management, a multi-asset-class investment firm with $150 billion in AUM, recruited two Church of England financial analysts in a bid to expand their own responsible investing operations.
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