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Bill Seddon Scholarship

Ellie Bradley - Commended

If you think of the Methodist Church as a business, it has an economic responsibility to survive. Archie Carroll illustrated the Corporate Social Responsibility pyramid - the first layer being economic responsibilities, then legal, followed by ethical and finally philanthropic. Economic being the base layer, the church must make some sort of profit to 'survive' before it can carry out its ethical and philanthropic responsibilities. Thus proving the church should invest its assets and aim to make a profit in order to fuel its projects. However, the Church is not a business, it is a charity and it can be argued having it’s primary aim to make a profit is not what the church is about as it is a not for profit organisation. There is a conflict of interest as money is needed to do good things but focusing too much on this alienates the true purpose of the church.

There are many various socially responsible funds, but not all of which comply with Christianity. Investing the assets of the Methodist Church involves only investing in ethical funds. This can be done by ether screening out or screening in, also known as negative and positive screening. Screening out means investing in anything other than funds that support unethical ventures such as gambling, alcohol, tobacco, pornography and the arms trade. Screening in takes more time and effort as it involves carefully selecting funds that act in an ethical manor and promote positive behaviour. In the case of the Methodist Church, screening in must be done as it is vital to check investments comply with the teachings of Christianity.

Many ethical funds are measured on a scale from light to dark green. Light green funds will have some ethical principles and basically screen out companies such as in the tobacco industry. Funds further to the dark green side of the scale, for example Jupiter Ecology, take a more rigorous approach and actively seek out companies making a positive difference. The church should be investing in companies further to the dark green end of the scale as the Bible teaches us to help people and have a positive influence. On the other hand, this proves difficult as it significantly reduces the amount of companies available to invest in, therefore providing lower returns and possibly increasing risk as there is less scope for diversification. It is difficult to partake in ethical investing whilst still delivering high returns and growth, especially if there is economic uncertainty or a decline in overall growth.

Investing in a truly ethical manner is very difficult as it involves extensive research and analysis, it is also sometimes hard to know the true intentions of some companies. Unfortunately, many businesses partake in 'green washing' whereby they make it look as though they are being socially responsible, helping communities and protecting the environment but this is done just for show. They do this to avoid loosing custom to their more ethical competitors, and to avoid backlash from the media for not being responsible. This is sometimes hard to prove and can often result in worse consequences than if they never attempted to appear ethical. A big problem arises from this and makes it harder for ethical investing as not every organisation has the same moral principles as the Methodist Church does.

Some may argue that investing in less ethical companies that bring higher returns can be more beneficial to society as the money raised from this can be spent improving people's lives. It is a difficult debate as there is always the option of raising more money and therefore helping more people, but neglecting the teachings of the Bible. Investors can fully comply with Christian values but they may not get any returns and thus the money has not grown in value, and with inflation this provides even less available cash to help individuals and the community. It is a very difficult call to make and raises the question is it less ethical to help fewer people but remain true to the organisation's values or veer off course slightly but improve the lives of many and stop as much suffering as possible?

Partaking in less ethical investments can bring greater returns resulting in greater scope to demonstrate Christian values and help those in need but may also bring a guilty conscience. The investments can still be ethical and not supporting bad organisations, just not as responsible as other investments may be. In this case, investors must decide if it is better to invest in only the most ethical companies but have less cash or invest in companies that are still ethical but on the light green end of the scale, which may not fully comply with the teachings of the Bible but allow the church to do more good.

The Church's assets comprise of buildings, furniture inside the buildings, organs, balances, donations etc. The money raised from donations should be spent however the donator wishes it to be spent. If they are okay with the church investing it then it should be invested in order to multiply in value. If the donator wishes it went to a specific thing e.g. Helping the local community then it should be spent investing in the community, and not invested in funds. Donators to the church would be appalled if the money was not spent how they had hoped and will be put off donating into the future. Also, if their money has been invested and the church is investing in unethical funds they may be upset and this is unethical in itself and completely goes against the teachings of the Bible.

When investing, the two main considerations that need to made are: 1. Appetite for risk and 2. Capacity for loss. The Methodist Church can not afford to invest with high risk, as it is in effect gambling away the assets of the church that have been collected and raised over many years. The church does not have great capacity for loss as it needs funds to continue its charitable activities and cannot afford to get in any sort of debt. It is unthinkable to take out risky investments when investing the money raised by donations given from the kindness of people's hearts. The church has a moral obligation to invest sensibly, and be frugal with funds raised.

Ethical funds and companies committed to being socially responsible, however, tend to carry less risk than those that do not as they themselves are more risk averse, which is a benefit for ethical investors. Such companies are less likely to have high gearing ratios and are likely to operate with caution. Their balance sheets will be more liquid and the risk of insolvency should be lower. This is also another thing to take into account when investing the assets of the church, not only should they try find companies that have ethical principles, they should also check the way they manage the business and it's money is responsible. For example a firm with high gearing ratios, meaning a greater proportion of the company is funded by long term debt, is less liquid meaning it is harder to transform assets into cash. This increases the risk of the business failing and means if the church had money invested they could potentially loose this money and it means the church is supporting unethical operations.

It is important to seek out companies that are responsible with their money because this makes them a less risky investment and more sustainable. An example of an unsustainable business model is that of Northern Rock, they were determined to own a greater share of the inflating housing market and in doing so neglected its own sustainability and responsible business practises. They wrote mortgages to sub prime individuals/households who couldn't really afford to take on this debt, without having a corresponding deposit from other customers to balance cash flow. Instead, they sold off the risk in packaged up mortgages as bonds and sold it to investors. This practise was not only unethical, it was unsustainable and carried high systemic risk - for this reason this is the sort of company the church would not invest in and any company operating in a similar manner should be avoided.

Northern Rock failed because they had a serious liquidity problem and this negatively affected many individuals and the whole economy. Even firms who don't partake in questionable lending practises but are not in a good cash flow position/not managing their finances properly, should be avoided. Going back to Carroll's CSR pyramid, firms have an economic responsibility which means ensuring sustainable finances, which is the foundation of the business and is essential to achieve before they can do greater ethical activities. Companies with high gearing ratios can be seen to act out of greed, rather than for the benefit of society and are therefore not in line with Christian values, so would not make up an investment portfolio used by the Methodist Church.

It is important to diversify investments to spread risk and ensure no money is lost. Many Christian investment funds exist, such as the CFB's own fund which may not bring as high returns as some funds but they carry significantly less risk, comply with the teachings of the Bible and provide a means for Christian's to partake in investing without going against the word of god. The rise of ethical and in particular Christian funds is a great thing for religious individuals who may have previously avoided investing their money as they do not wish to support unethical organisations. They also allow the Methodist Church to invest and grow its funds so there is more available cash. They are also good as the lower risk may suit Christian investors and in particular the church who cannot afford to gamble away money on risky investments.

In conclusion, the church has some sort of obligation to have a surplus of cash available to carry out charitable projects however this does not mean the assets of the church should be invested. The church must carefully consider its stakeholders, as a business would do, and prioritise which of those have the greatest influence and consider their desires for how the church's assets should be invested. Investing the assets of the church, as long as it is done ethically and in line with the teachings of the Bible, is a great way of providing finance for the church itself and for the organisations and individuals the church supports. It is difficult to invest and get a high return whilst simultaneously keeping in line Christian principles but there are many funds out there that manage this.

In order to do this, lower returns must be accepted as higher returns may mean investing in less ethical companies. The assets of the Methodist Church must be carefully managed as many things the church owns, such as the church buildings themselves, hold historical value. This means the money the church has should not be thrown around in careless investments that could threaten the ownership of such assets, which may potentially need to be sold off to cover any debts. Investing without caution like this goes against the church's principles, and should be avoided.

The line should be drawn where there is a trade off between Christian values and the size of investment returns. Less ethical investments may bring more money for charity but whether it is right or wrong to help more people with money raised in not the most positive way possible is debatable. There could be a compromise of investing in funds in the middle of the light to dark green scale, following as many of the teachings of the Bible as possible whilst attempting to not sacrifice returns. Investors must be careful to not get caught up in the returns, and remember this is the church's money, therefore it should not support anything that goes against Methodist values.

The church should aim to raise as much money as it can, without sacrificing its principles, because a lot of good can be done with this money. As long as the companies invested in are ethical in their approach, finances and conduct then there is mutual benefit for both the company and the church. The extra money for the company will help fund their projects that are beneficial to the community so the church is promoting their good deeds, whilst also providing more finance for its own good deeds. It is a win win situation and this does not go against the teachings of the Bible, as lots of good comes out of the deal for both sides. Therefore, the line is crossed if investments go against ethical and biblical principles but investing up to the line brings many benefits. Investing the Methodist Church's assets should be done with great caution, however if done responsibly it is a great way of funding the church's activities.

Ben Grewcock - Commended

Introduction

Investing is a large part of any organisation. It is vital to invest any surplus income to generate more income, especially if the founder of that organisation stated that you must earn all you can - such is the case of the Methodist Church. The definition of investment is "the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value" (Dictionary.com, 2017). Ethical investment involves balancing the need for a high return with the ethical consequences that come with it. Achieving a high return whilst still abiding by moral standards is paramount, yet extremely difficult and entirely subjective; in any given circumstance, 2 people could differ in opinion and draw the line between profit and ethical consequences at different points. This essay will delve into the various aspects of being able to invest ethically, including the moral and theological principles that shape Methodism's current ethical beliefs, the systems they have in place to ensure a fair decision is made, as well as how the Methodist Church could improve to become more adept at deciding where to "draw the line".

Methodist Views on Investment

Even in the 18th century when the Methodist Church was formed, there were certain opinions on what to do with the money and assets owned by the Church. John Wesley (the founder of Methodism) stated in his sermon entitled: "The Use of Money," that to be faithful managers of money, there are only 3 rules one needs to follow. These rules are:

  1. Earn all you can.
  2. Save all you can.
  3. Give all you can.

All three rules apply to investment, the first being the most relevant. Wesley elaborates on rule one, saying that it is our duty to earn all the money we can, but not if it troubles our conscience or hurts our neighbour (Wesley, 1996). The parable of talents also supports these rules (Matthew 25:14-30). This explanation of what to do with money is the foundation of ethical investment within the Methodist Church. With more money, Methodism will have the means for more missional activities, helping more people. This then complies with rule three. The Methodist Church is a charity: "An organisation set up to provide help and raise money for those in need" (Oxford Dictionaries | English, 2017). In addition to the National Connexion being a charity, any local church, circuit or district can also be a registered charity depending on their income, so they all have a duty to give as much as they can, therefore need to earn all they can (Methodism, 2017).

Methodist Principles of Investing

Any investing within the Methodist church is performed by the Methodist Central Finance Board (CFB). They act as shareholders of major companies, including FTSE 100 companies, meaning they can vote in shareholder meetings. This provides Methodists with a loud voice within the British financial center. The CFB are advised on ethical standards and current world issues by the JACEI, a group of 10 people nominated by the CFB and Connexion. The JACEI aid the CFB in ensuring their activities adhere to the ethical codes and moral views of the Methodist church and those within it (Methodism, 2017). The JACEI release annual reports to conference every year, detailing their involvements with organisations that year, the most pressing issues and their analysis of how the CFB have managed the funds under their control, adhering to the ethical stance which is in accordance with the aims of the Methodist Church (JACEI, 2017).

As well as the basic guidelines and teachings of the Methodist Church on investment, there are specific principles the JACEI and CFB adhere to. There are currently 18 policy statements on subjects including gambling, the food industry and climate change. Within these policy statements are biblical traditions, key issues/precedents and policy guidelines assisting the CFB in making the best investment decisions, regarding where each company's income is sourced, and their dealings with the communities they affect (Methodist.org.uk, 2017). Even policy statements on topics that didn't exist when Methodism began, utilise thinking from centuries ago. An example of this is the climate change policy statement. Although a 21st century issue, the policy uses Wesley's "The Use of Money" sermon in which he states that it is imperative to focus on gaining money without hurting our neighbours. The planet affects all our neighbours, so funding climate change projects and companies whose environmental policies are at the forefront of their businesses is very important (Central Finance Board of the Methodist Church, 2009).

Recent Investment

Methodism itself has invested around £1billion in stocks, shares, bonds and other schemes, as well as being part of the Church Investors Group (CIG). The CIG has 59 members made up of many mainstream Church denominations and church related charities. They have a total of £17billion invested assets (Churchinvestorsgroup.org.uk, 2017). With such a sizable level of funds at their disposal, the CIG has a huge effect on the British and global economic markets.

As well as investing in socially responsible companies, the Methodist Church also encourage organisations to change their behaviour for the better to improve their chance of receiving funding. For example, in 2015 Methodism participated in a collaborative investment engagement to make more employers become accredited living wage employers organised by the Living Wage Foundation. They co-signed letters to 75 FTSE 100 companies, imploring them to raise their wages to that of the national living wage or above. As a result, over 70% of those companies contacted have made the change or accepted the idea in principal (JACEI, 2016). This is proof that investors of any kind can have a significant impact on the way businesses behave, and provide solutions for important social issues such as wages and employment.

Where to Draw the Line

There are 2 options any entity trying to invest ethically can take.

Option 1 - The Hard Stance

The first option involves taking a hard stance on any ethical issues that may be involved investment opportunities, either an issue is ethical or it isn't. For instance, if it is thought that alcohol, gambling and pornography are dangerous and unethical, then any companies who sell, endorse or make any form of revenue from these would not be eligible for investment. After this decision is made, the investor must then see if there are any investments remaining with a high enough return to be viable.

This option would result in a drastically reduced pool of potential investment opportunities, which would - for the most part - have lower returns on investment. However, choosing to invest in socially responsible projects is not just a way to ease the conscience. It can have a long-term effect on profit via increased revenue, due to an increase in consumer awareness and a greater likelihood to use a service that is socially responsible over the last decade (Puaschunder, 2014).

Option 2 - Finding a Balance

This option involves placing a line somewhere in-between profit and ethics that achieves the highest return whilst not compromising any major ethical beliefs. This could mean investing in a company who buy materials from a different company who make money from alcohol sales, but has a large return. If alcohol is deemed to be unethical, this partly goes against the moral views of the investor, but could be acceptable since the company they are investing in make no revenue from alcohol themselves. The profits of these investments tend to be larger than those of completely socially responsible nature, but could cause a negative reaction, and can affect the reputation of the organisation.

An example of option 2 occurred in 2015, when the JACEI became concerned that ITV revenues derived from partnerships with gambling platforms appeared to be growing. Methodism is critical of gambling, and despite there being little mention of it in the Bible, they believe that gambling is gaining money at the expense of others, and has the potential to ruin lives if an addiction begins to manifest itself (Cfbmethodistchurch.org.uk, 2014). Therefore, the JACEI contacted ITV to try and understand their appetite to grow revenues from gambling. They received a response stating that "ITV holds no gambling licenses; derives less than 3% of revenues from gambling; and goes beyond legal requirements to ensure all activity is responsible and appropriate" (JACEI, 2015). The JACEI then said they were impressed by this, and deemed that ITV's level of exposure to gambling was acceptable, so continued to invest in ITV.

This brings about the debate of whether anything can be "ethical enough." At first glance, the concept should not exist: either a company displays behaviour that goes against certain ethical beliefs, or it doesn't. However, if there is a high enough return on investment, a small discrepancy in moral standings will sometimes be overlooked. In ITV's case, Methodism is against gambling, and believes it to be unethical. However, ITV gaining 3% or £89million of their revenue from this unethical source was seen to be low enough to be acceptable for the money they receive from investing in them ("ITV Press Centre", 2016).

£89million is an enormous amount of money. This money has been received by giving exposure to gambling, and some people would be extremely angry that Methodism is investing in a company who gains such a large amount of money by supporting unethical behaviour. Other people may think of this as negligible, that if Methodism isn't directly funding unethical processes then the investment should go ahead, as the Methodist Church can use the extra money gained money for great purposes.

Whilst option 2 contains numerous different choices that are to be made, it is the better option to take. Keeping as high a return as possible is in everyone's best interest. Methodism can achieve more missional objectives with more money, and the investees get more funding. But the most important aspect of option 2 is that it allows discussion. Conversing with businesses can utilise the strong financial state of the Methodist Church and elicit change in even the largest of companies, so that their behaviour can better benefit both consumers and the planet we live in.

Conclusion and Recommendations

The concept of ethical investment is a wide and uncertain one. Being a charity, Methodism has a duty to help as many people as it can, which also means making as much money as possible to facilitate that. The Methodist Church has principles on how and where to invest dating back to its creation in the 18th century, as well as almost 20 different policy statements on a range of different ethical issues, and various codes to abide by to make the best decisions they can. But despite this extensive guidance, any decision the CFB makes is still open to scrutiny. Due to the subjective nature of ethics, there cannot be any templates or set processes when it comes to investing the money of the Methodist Church. Every investment opportunity will come with a multitude of options, all of which will affect different groups of people in different ways, and undoubtedly receive an adverse reaction from someone.

Based on this, the recommendation is to be open to compromise and discussion, both between members of the CFB and with the companies they want to invest in, and assess each point on the "ethical investment line" fully. It is acceptable to make compromises for small discrepancies if it means being able to help more people, as long as everything is considered fairly. To achieve this, a large and diverse team of people, who together represent all demographics is necessary. This way, every party can be represented and appropriately considered, so the correct decision can be made. A decision that gains the most amount of money, with the least ethical consequences, so the Methodist Church can continue to help those within and outside the communities that they are such integral parts of.


  1. Cfbmethodistchurch.org.uk. (2014). Gambling - Policy Statement. [online] Available at: http://www.cfbmethodistchurch.org.uk/ethics/policy-statements/cfb-gambling-policy-statement.html [Accessed 14 Jul. 2017].
  2. Churchinvestorsgroup.org.uk. (2017). [online] Available at: https://churchinvestorsgroup.org.uk/ [Accessed 12 Jul. 2017].
  3. Central Finance Board of the Methodist Church (2009). [ebook] Climate change - Position paper., p.1. Available at: http://www.cfbmethodistchurch.org.uk/downloads/position_papers/cfb_climate_change_position_paper.pdf [Accessed 13 Jul. 2017].
  4. Dictionary.com. (2017). the definition of investment. [online] Available at: http://www.dictionary.com/browse/investment [Accessed 5 Jul. 2017].
  5. ITV Press Centre. (2016). ITV Full year results for year end 31 December 2015. [online] Available at: http://www.itv.com/presscentre/press-releases/itv-full-year-results-year-end-31-december-2015 [Accessed 15 Jul. 2017].
  6. JACEI. (2015). [ebook] Annual Report 2015. Available at: http://www.methodist.org.uk/media/1813654/jacei-colour-annual-report-2015.pdf [Accessed 13 Jul. 2017].
  7. JACEI. (2016). [PDF] JACEI Annual Report 2016, p.13. Available at: http://www.methodist.org.uk/media/2269750/jacei-annual-report-2016.pdf [Accessed 11 Jul. 2017].
  8. JACEI. (2017). [ebook] (JACEI) - Summary Report 2017. Available at: http://www.methodist.org.uk/media/2602641/conf-2017-15-JACEI.pdf [Accessed 13 Jul. 2017].
  9. Methodism. (2013). [PDF] Human rights and conflict - Policy statement. Available at: http://www.cfbmethodistchurch.org.uk/downloads/policy_statements/cfb-human-rights-and-conflict-policy-statement.pdf [Accessed 11 Jul. 2017].
  10. Methodist.org.uk. (2017). Ethical Investment. [online] Available at: http://www.methodist.org.uk/jacei [Accessed 10 Jul. 2017].
  11. Methodism. (2017). Excepted Status. [online] Available at: http://www.methodist.org.uk/static/rm/mtmm/excepted_status.pdf [Accessed 6 Jul. 2017].
  12. Oxford Dictionaries | English. (2017). charity - definition of charity in English | Oxford Dictionaries. [online] Available at: https://en.oxforddictionaries.com/definition/charity [Accessed 6 Jul. 2017].
  13. Puaschunder, J. (2014). Ethical and Socially Responsible Investing. Investor Behavior, [online] pp.513-532. Available at: http://onlinelibrary.wiley.com/doi/10.1002/9781118813454.ch28/summary [Accessed 13 Jul. 2017].
  14. Wesley, J. (1996). Sermons on several occasions. Ilkeston: Moorley's print & Pub., pp.502-504.

Kyle Michael Harley - Commended

Introduction

In this essay I shall investigate where the line should be drawn when investing the assets of the Methodist Church. According to the Oxford Dictionary, the definition of investment is "The action or process of investing money for profit" [1]. Ethics are "moral principles that govern [...] the conducting of an activity" [2]. There are many issues to consider when evaluating whether the actions of a business can be deemed to be ethical, but nevertheless this is vitally important when it is the Church's money on the line. While some actions are obviously unethical, this essay will also explore more nuanced aspects of a business' effects on consumers, workers, the environment, and animal welfare.

Investments can take multiple forms - to outline just a few: "property investment" is where a property is purchased with the intention of earning a return investment whether this be through rental income or the future sale of the property, or a combination of both [3]. "Stocks and shares" on the other hand are an equity investment; by investing in a company's stocks you become entitled to a share of the company's earnings/assets as well as any dividends for shareholders. "Investment bonds" can be classified as a type of life insurance policy where you invest large sums of money into funds, who in turn manage assets, and the return you make on your investment depends on the fluctuations in the value of your fund's assets. The simplest way of "investing" is putting money into a bank account and simply earning interest, where the bank has invested the money on your behalf and the return you receive will be dependent on the bank's interest rate.

Within the Church, ethics is seen to be of extremely high importance as we must follow in the path of God and also must not appear hypocritical when investing on the Church's behalf. We must maintain the principles set forth in the Bible, as this is God's word. God warns against dealing falsely or lying to one another in Leviticus 19:11 "you shall not steal, you shall not deal falsely, you shall not lie to one another". I believe that being unethical invariably involves being unjust and dishonest to fellow man which is not what God intended us to be like.

One question to ask ourselves is "What Would Jesus Do?" (WWJD?). In my opinion, he would be honest and just. If we claim to believe in what he says, then surely we should not just preach it but actually live it. Since I feel that acting in an unethical manner inherently comprises being inconsiderate to others (whether that be exploiting workers, disregarding animals' welfare or harming the environment), I believe the Bible forbids this in the passage Luke 6:31 "treat others the same way you want them to treat you". Being unethical is therefore not obeying God's law. It is thus crucial that the Church does not condone or fund this behaviour by investing in stocks or buying property in/from unethical businesses.

The Methodist Church does recognise its ethical obligations in both its past and current investments. As evidenced on the Methodist Church website, investments in "companies that profit from alcohol, gambling, pornography or the arms trade" are already avoided [4]. However, this essay will explore whether there should be other more nuanced considerations in the ethics of investments and where the line should be drawn.

The Methodist Church

The Church Investors Group is "a membership organisation representing the charitable and pension funds of denominations, dioceses, religious orders and Christian based charities". It boasts over 59 organisations as members, mainly located within the UK and Ireland, as well as combined investment assets of over £17 billion [5]. According to the Methodist Church website, it currently has around £1 billion invested in "stocks, shares, bonds and other schemes" in keeping with ethical doctrine. [4]

The Methodist Church needs money to maintain churches across the country (to pay heating bills etc). Additionally, resourcing missions across the country and training people in ministry and discipleship have costs associated with them. Investing money in supporting people who want to get into ministry will enable them to grow in confidence and go deeper into the word of God. The Church is all about the people within it, and by investing in these people whether young or old we can help spread the word of God and encourage more people to get to know Jesus. Therefore, ethical investments are a useful way of earning a return and increasing the Church's capital for the future. Nevertheless, Proverbs 16:8 states "better is a little with righteousness than great revenues with injustice", implying that God values those who behave ethically despite potentially receiving smaller returns on investments.

Ethical Issues to Consider

One thing to look out for when evaluating whether a business behaves in an ethical way is exploitation of workers within the supply chain. Usually this is done to reduce costs at the expense of their workforce. It can be measured by considering their overall wellbeing, including their salaries, pension schemes, conditions, hazards, job security, and potential for career progression. Exploiting the workers could include poor pay packages and/or long hours in poor working conditions.

Exploitation of the environment is another very common issue as businesses can frequently cut corners in disposal of waste, or can reap the Earth of its natural resources in an unsustainable way. Doing so can have a devastating impact on the environment for generations to come. Not to mention the use of fossil fuels that cause alarming amounts of destruction to the planet as these finite resources must be extracted from the ground using heavy machinery which contributes to air pollution and thus global warming. The fuels are then combusted releasing further greenhouse gases that contribute to the greenhouse effect. Extracting these fuels from the sea also has the risk of oil spills which can cause loss of corals and other coastal ecosystems, leading to a loss in marine life. These finite resources such as oil, coal and gas are unsustainable as they damage the environment and will inevitably run out. Deforestation is yet another way we exploit the environment's resources, as the loss of trees cause an increase in CO2 as the trees can no longer photosynthesise to absorb CO2 from the atmosphere. This leads to global warming.

Since God gave man "dominion over the fish of the sea and over the birds of the heavens and over the livestock and over all the earth and over every creeping thing that creeps on the earth" (Genesis 1:28), we must look after Earth's creatures. Companies that exploit animals by hunting illegally, experimenting inhumanely on animals are therefore not good businesses to invest in either.

Although most businesses act legally, they can still affect people's lives in extremely serious ways, potentially even causing their deaths or serious harm. Industries profiting from the sale of tobacco and alcohol can leave consumers with physical harm such as a vast range of cancers, lung diseases and cardiovascular diseases which lead to their deaths. Other industries can cause mental harm to their consumers, such as unrealistic body images depicted in fashion industry, to unhealthy relationships depicted in pornography.

The above are just some of the ethical issues the Church must consider when evaluating who and what to invest in.

Case Studies

BAT/Philip Morris

The tobacco industry is one where I feel investments are definitely unethical to make. Made up of large companies such as British American Tobacco (BAT) and Philip Morris, the tobacco industry is huge, with worldwide sales of half a trillion dollars. [6] Tobacco is unethical in number of ways, it is extremely addictive that causes problems for the consumer and it also cause terrible damage to the environment. Philip Morris owns seven of the world's top fifteen international brands, including the world's best-selling brand. It was accused of exploiting workers in Kazakhstan, often taking people's passports away and making them work for free. There were 72 cases of children working on Philip Morris's tobacco farms, the children slept in living areas full of dangerous pesticides which led to them developing red rashes on their neck and stomach. [7] Sales of cigarettes are unethical as they lead to consumers becoming addicted, which can lead to financial problems and health problems. It affects the mental health of its consumers. It damages the environment, often deforesting natural woodland for tobacco plantations. Animals are exploited by destruction of their habitat because of the aforementioned deforestation.

Co-Operative Group

Conversely, the Co-Operative are well known for their ethical behaviour. The Co-Op prides its self on their ethical business; providing good wages to its staff, being "the UK's largest convenience seller of Fairtrade products" [8] and their commitments to protecting the environment, reducing their Carbon emissions by 40% since 2006 [9]. Investing in the Co-Operative Group is likely an ethical investment.

Nestlé

Nestlé are known for some of the World's best-known brands, spanning industries like confectionary, drinks and cereals - but also for being the target of the World's longest running boycott and having faced numerous controversies. One such event was the boycott associated with Nestlé's aggressive marketing of baby formula powder as a substitute for breastmilk in developing countries. Critics argued that their marketing was morally irresponsible as local water supplies were often polluted and this lead to feeding infants infected water that was required to mix with the powder. They also argued that failing to breastfeed meant mothers did not pass on antibodies to help support their babies' immune systems. Additionally, once mothers had transitioned to baby formula, they would no longer produce breastmilk and thus could not go back to breastfeeding their child. Instead they were forced to continue buying the baby powder or risk their baby starving [10]. This effectively trapped the mothers into continuing to purchase the products.

Conservation charity Mighty Earth's "Palm Oil's Black Box" 2016 report claimed that Nestlé was a customer of Olam, a company that traded palm oil in questionable ways and was linked with deforestation in Asia and Africa. As mentioned earlier, deforestation can lead to global warming, and I believe is not in line with the stewardship and dominion over the Earth that God gave mankind. On the other hand, Nestlé has invested in many of its workers, and claims that it sees "supporting its supplier base and rural development as a means of [...] improving the quality, quantity and sustainability of its products". In their 2010 'Creating Shared Value' report, Nestlé proudly explain the investments they make in some of the local rural communities where they operate factories; providing literacy and numeracy programmes, alongside formal apprenticeship training. These sort of opportunities could mean increased job security and career progression, so I believe they are a good indicator of Nestlé's commitment to workers' wellbeing.

Conclusion

In conclusion some investments are clearly ethical, and others are obviously not so. Ultimately, the Church must make the final call on where to draw the line, as it is very important that the Church remains a force for good. Investing in companies in industries like tobacco would mean directly profiting from consumers that are being harmed, and this clearly goes against the teachings in the Bible. While investing in companies like the Co-Operative Group is very attractive, there is sadly a limit on how many such ideal companies exist. The majority of businesses are more like Nestlé; investing in them would require a careful balance of any controversies and allegations, versus the good they are doing in the World.

Psalm 24:1 says, "The earth is the Lord's and the fulness thereof." It thus isn't our money; it is God's money. And if he puts us in charge of His resources, we need to make sure we are using them in the manner in which God would wish us to use them. Otherwise, we're making unethical decisions, and that's not what God wants. Even if companies such as Phillip Morris and BAT represent very profitable investments, it says in Proverbs 13:11 "dishonest money dwindles away, but he who gathers money little by little makes it grow". I take this to mean that we must trust in God and he will provide us with all we need for the Church without needing to resort to investing in unethical businesses. It is therefore necessary for us to invest in an ethical manner, avoiding companies that directly contradict God's teachings.


  1. Oxford English Dictionary, "Definition of "investment"," [Online]. Available: https://en.oxforddictionaries.com/definition/investment. Accessed 24 July 2017.
  2. Oxford English Dictionary, "Definition of "ethics"," [Online]. Available: https://en.oxforddictionaries.com/definition/ethics. Accessed 24 July 2017.
  3. Investopedia, "Investment Property," [Online]. Available: http://www.investopedia.com/terms/i/investment-property.asp. Accessed 17 July 2017.
  4. The Methodist Church, "Ethical Investment," [Online]. Available: http://www.methodist.org.uk/jacei. Accessed 10 July 2017.
  5. Church Investors Group, "About," [Online]. Available: https://churchinvestorsgroup.org.uk/about/. Accessed 11 July 2017.
  6. S. Bowers, "Global profits for tobacco trade total $35bn as smoking deaths top 6 million," 22 March 2012. [Online]. Available: https://www.theguardian.com/business/2012/mar/22/tobacco-profits-deaths-6-million.
  7. S. Walker, "Tobacco giant Philip Morris sold cigarettes made using child labour," 14 July 2010. [Online]. Available: http://www.independent.co.uk/news/world/asia/tobacco-giant-philip-morris-sold-cigarettes-made-using-child-labour-2026759.html
  8. Co-operative Group Limited, "Fairtrade & Ethical Trading," [Online]. Available: http://www.co-operativefood.co.uk/food-matters/fairtrade-ethical-trading/. Accessed 20 July 2017
  9. Co-operative Group Limited, "Reducing our impacts," [Online]. Available: http://www.co-operativefood.co.uk/food-matters/reducing-our-impacts/reducing-our-impacts-energy/. Accessed 20 July 2017
  10. S. Smith, "5 shocking scandals that prove it's time to boycott Nestlé," 15 May 2015. [Online]. Available: https://www.dailydot.com/via/Nestlé-california-bottled-water/

Emily Insanally - Commended

For the Methodist Church, there is more to making an investment than maximising returns. The mission statement of the Central Finance Board of the Methodist Church makes this abundantly clear: "We aim to construct investment portfolios which are consistent with the moral stance and teaching of the Christian faith [and] to be a Christian witness in the investment community" [1]. This overriding principle is, of course, rooted in the core values of the Church, which to quote John Wesley boil down to "[doing] all the good you can, by all the means you can, in all the ways you can, in all the places you can, at all the times you can, to all the people you can, as long as ever you can".

Thus, the guiding philosophy of the Methodist Church, when making investments, is to make a healthy profit while, more importantly, ensuring that its investments help to bring about positive changes in the firms in which it invests or to maintain high standards in firms that already operate ethically. In short, the Methodist Church aims to turn a profit whilst being and, indeed, in order to be a force for good.

It could be argued, of course, that, when investing the assets of the Methodist Church, the priority should be making the greatest returns in order to maximise the funds available to help people. In this way, the money earned on investments could be used to grow the Church as well as, most importantly, to fund the Church's projects and provide charity to those in need. That is to say, in order to do good, the Church must make as much money as possible from its investments.

With £1.4 billion to invest, the Church is not a small investor and this adds considerable weight and influence to its decisions. Though this may not be as much as other investors, such as the Church of England, whose investments total £7.9 billion, the Methodist Church is still in a position not only to set an example to other investors but to encourage better practices in the companies in which it invests.

Nor is the Methodist Church alone in taking an ethical approach to investing. Indeed there are several precedents for ensuring that the pursuit of profit is not at the expense of human dignity, perhaps the most famous being the pressure to withdraw investments from firms doing business in apartheid-era South Africa. The moral indignation and backlash that Barclays, Kodiak, General Motors and Shell, among others, faced for their role in supporting and essentially propping up the apartheid regime in the second half of the 20th century can be seen as a factor contributing to the eventual fall of the regime. This is why it is so important that organisations like the Methodist Church show consideration when making investments because by taking a stance against unethical behaviour, the Church reinforces its standing as an exemplar of ethical investment.

It cannot be in the best interests of the Church to find that its investments are supporting firms with records of human rights abuses, dubious workers' conditions and low levels of environmental awareness. An absence of morality in the Church's investment strategy would simply be damaging to the Church's image and undermine its teachings and ability to project itself as a bastion of Christian faith. It is therefore of the utmost importance that the Church should make no compromise when investing and ensure that investments are made only in firms that behave ethically.

The Church must, in effect, practise what it preaches. In this respect, as the Central Finance Board (CFB) explains, the Church not only takes a stand on obvious issues such as refusing to invest in companies involved in funding nuclear weapons or companies that profit from alcohol and gambling but also focuses on issues such as the treatment of workers, transparency, environmental issues and more recently, animal welfare.

There therefore appears to be an element of 'profit satisficing' in the way in which the Church's assets are invested. 'Profit satisficing' is when profit is sacrificed in order to satisfy as many shareholders as possible. By chasing not simply the biggest return but instead the biggest return from ethical companies, there may well be a possibly substantial amount of profit that is foregone.

In this regard, the Methodist Church seeks to find the balance between making good financial returns while acting within the teachings of the Church. The Church, however, does not necessarily need to sacrifice profit to uphold its ethics, as many companies nowadays recognise the importance of practising corporate social responsibility (CSR) with the objective of promoting positive social and environmental change.

This trend is perhaps best exemplified by the new attitude of some of the major oil multinational corporations (MNCs). MNCs such as BP have transformed themselves for the twenty first century by investing in green technology and becoming more ethical in their practices. Following environmental disasters and corrupt corporate practices in the 20th century, resulting in widespread international outrage and cynicism about the motives of many oil MNCs, they are now working to fix their damaged reputations and to be more responsible corporate citizens. Indeed, it is noteworthy that BP currently enjoy levels of profitability that compare favourably with previous periods. According to BP's share dividends information [2], from 1993 to date, BP's dividends have followed an upward trend from returns of 1.05 in the 1st quarter of 1993 to 7.7563 in the 1st quarter of 2017. Though, of course, there are other factors which have contributed to this trend, it is noteworthy that since 2010 when no dividend was paid - due to BP's need to finance a £13.5 billion clean-up and compensation fund for the environmental disaster that was the Gulf of Mexico oil spill - share dividends have been rising again giving suggesting that BPs actions are working.

Whilst it may be possible for the Church to make larger profits by investing in companies that maximise profits by taking short cuts when it comes to human and environmental rights, the lure of short-term gains should not override ethical considerations and long-term sustainability. Indeed, such companies might well fly high for a short period before going down in flames as they attract the wrath of regulators and consumers alike.

It makes better economic sense to invest in companies that are guided by ethical considerations because in the long run, it is these companies that will be more sustainable and therefore more profitable.

Take, for example, the matter of pollution and how firms are being encouraged to reduce carbon emissions and maintain profitability at the same time. Firms, especially industrial ones, emit large levels of pollution and are therefore the creators of negative externalities in production, causing a market failure and bringing the market away from the socially optimum level of output. Ideally, there should be no pollution but as this is not possible, a government solution is to issue a set number of tradable pollution permits to each firm. Some firms will not require all the permits and may then sell them to larger firms in need. Hence, these large firms have the option either to invest in green technology and lower their pollution levels or to buy more pollution permits from those firms that have an excess in order to continue to pollute at current levels. In the short run, investing in green technology is the more expensive option. In the long run however, this is generally not the case. As the government seeks to reduce pollution further and bring the market to the social optimum, the number of permits in circulation will be decreased. By reducing the supply of permits in the permit market while demand remains constant, the price of permits will rise, further increasing the firm's costs of production. This will reduce profits and as supply of permits becomes scarce, the firm may be forced to invest in green technology and the firm would be in the same position as the firm that had invested in green technology in the first place but only after having incurred much higher costs.

In the above scenario, by choosing to invest in the firm that took the environment into consideration, the Church would be better off in the long run. The idea of tradable pollution permits is one that is the basis of the European Union's Emission Trading Scheme [3]. This scheme is the world's largest carbon trading scheme, covering over 11 000 companies and after two successful phases, the scheme has now moved into Phase 3 which has the aim of reducing emissions by 21% by 2020.

This is an age rife with cynicism about religion and the general role of churches. The actions of the Methodist Church, in taking a stance against investing in unethical companies, can only help to dispel such cynicism and strengthen the presence of the Church in the world.

Investing the Church's assets is not a question of drawing a line but rather should be taken as an opportunity for the Church to act as a beacon of morality, make no ethical compromises and, as idealistic as it may sound, work to make the world a better place. By valuing firms' treatment of workers, respect for human rights and actions regarding environmental issues, the Church is made stronger in the eyes of the public.

The prevalence of capitalism as the modus operandi in most countries has led to moral compromises, as firms seeking to remain competitive especially in the globalised world cut corners to increase profit margins. This unfettered capitalism is really a case of survival of the fittest and the race to survive can sometimes lead to unethical practices. By choosing to invest ethically, the Church has the opportunity to help determine more ethical and equitable approaches to capitalism. If all investors were only to follow the money, the world would be a messy place indeed and the cycle would continue with the rich getting richer while the poor get poorer.

By putting its foot down and refusing to support companies that operate unethically, the Church is able to put pressure on these companies and in the long term, bring about positive changes. If these companies are allowed to continue to operate without any moral restraint, they will never improve or show any care or consideration towards the workers or the environment. The Church's position is made even stronger by its own actions which are guided by its ethics, an example being the decision the Church made in 2012 to pay all its employees the living wage [4]. This shows that the Church does not ask companies to operate ethically without first showing its own commitment to making ethical decisions.

The line between investment outcomes and ethical consequences when investing the Church's assets is not a fine one. It is a clear and definite line which is not to be crossed. When investing, there are no compromises to be made when choosing where to invest as to compromise on the investment is to compromise the integrity of the Church. Yes, the aim of the investment is to yield good returns but not at the expense of the Church's values. The end does not justify the means and if greater profit must be sacrificed for the assurance of ethical practices in companies, then so be it. Ultimately, a healthy return on ethical investments, along with the social and environmental returns of such investments, and the enhancement of the image of the Methodist Church and its ability to do good in the world, all taken together, must be the overriding consideration in determining how the Church invests. In the words of Bill Seddon, "making money isn't inherently wrong...as long as it's used for the greater good" [5] and the best way to honour Bill Seddon's legacy is to ensure that the Methodist "faith and beliefs are never compromised" [6] and ethical investment remains the CFB's priority.


  1. Mission Statement from JACEI Report 2017, http://www.cfbmethodistchurch.org.uk/downloads/jacei-short-report-2017.pdf
  2. BP cash dividends - ordinary shareholders, http://www.bp.com/content/dam/bp/en/corporate/pdf/investors/bp-cash-dividends-ordinary-shareholders.pdf
  3. What is the emissions trading scheme and does it work? https://www.theguardian.com/environment/2011/jun/07/ets-emissions-trading
  4. Investing Ethically video clip, http://www.methodist.org.uk/mission/public-issues/ethical-investment
  5. Christianity and capitalism: Investing in the Lord, http://www.bbc.co.uk/news/business-14615704
  6. Ibid